BoT: Headline inflation likely below projection

Thailand's headline inflation for 2026 is expected to come in below the Bank of Thailand's previous forecast of 2.8%, according to central bank executives speaking at the Monetary Policy Forum on Wednesday, 9 July 2026.

The primary driver behind the revised outlook is declining global oil prices, which have fallen from an average of US$65 per barrel to $64 per barrel as of July 6, returning to pre-war levels. In response, Thailand's Oil Fuel Fund Board announced retail fuel price reductions effective Wednesday, with diesel cut by 2.56 baht per litre and all grades of gasoline reduced by 2.51 baht per litre.

Despite falling fuel costs, the Bank of Thailand's assistant governor for monetary policy, Don Nakornthab, cautioned that the pass-through of lower energy prices to consumer goods has not yet been fully realised. He noted that due to price stickiness, certain goods and services are expected to remain elevated, particularly food away from home, while some categories such as public transport fares and airfares may see reductions.

The Bank of Thailand's Retailer Sentiment Index shows that around 60% of large retailers expect to raise prices by no more than 10% over the next three months, with essential household goods, fresh and dried food, and other food and beverages among the categories most likely to see increases.

Looking further ahead, the central bank forecasts headline inflation will slow to 1.4% in 2027, supported by easing Middle East tensions, the fading impact of El Niño, and a high base effect. Medium-term inflation expectations are expected to remain within the central bank's target range of 1 to 3%.

On economic growth, the Bank of Thailand upgraded its 2026 GDP growth forecast to 2.3%, up from a previous projection of 1.5%, largely due to government stimulus measures. However, Mr Don described this figure as unsatisfactory, noting it remains below the economy's potential growth rate of 2.7% and that the recovery continues to reflect a K-shaped pattern, meaning gains are unevenly distributed across sectors and income groups.

For businesses and investors operating in Thailand, understanding inflation trends and growth projections is an important factor when planning financial decisions, contracts, and long-term commitments. If you have questions about how economic conditions may affect your business structure or investments in Thailand, the team at SLF Legal is here to help.