Thailand's inflation predicted to surge to 3% in April

Price pressure on consumer goods was muted.

According to DBS, headline inflation is projected to reach 3.0% YoY in April, up from 2.7% in the preceding month. Price pressure on consumer goods has proved to be surprisingly muted over the past few months despite the continued strong showing from domestic indicators. 

Notably, loan growth for individuals has stayed above 20% YoY since December while business loans are still strong relative to longerterm trends.

Here's more from DBS:

Administered control over selected consumer goods, the recent fall in commodity prices and baht strength are some reasons behind why consumer price inflation has stayed muted.

Overall, while the upward trajectory in inflation is likely in the coming quarters, price pressures appeared to have receded somewhat.

However, the same cannot be said about asset price inflation with both the stock market index and property prices having run up significantly over the past four years.

In an effort to deter excessive speculative inflows, the policy rate has also been kept low at 2.75% since October. With the divergence between consumer prices and asset prices becoming apparent, managing risks on both sides requires more than just tweaks in the policy rate.

More macroprudential measures could be introduced over the medium term.