A Guide to Thailand Inflation and its Effects

Inflation in Thailand experienced a downward trend for the second month in a row, marking a 33-month low in November. This decrease sparked concerns regarding the increased risk of economic deceleration and potential deflation. The Commerce Ministry of Thailand has also predicted a further decline in the inflation rate in December.

Deflation is defined as a period where the prices of goods and services decrease over time. This typically leads to a reduction in consumer spending as people anticipate further decreases in prices. As a result, manufacturers are forced to reduce prices, leading to lower profits and a subsequent economic slowdown.

Deflation is characterised by three key indicators: a negative inflation rate, a continuous contraction in the inflation rate for at least one quarter, and a negative movement in economic indicators such as GDP, private consumption, investment,…