Thailand’s 2025 Inflation Falls Below Zero but Officials Reject Deflation Classification
Despite annual price declines driven by lower energy and food costs, Thai authorities maintain that core inflation and economic demand preclude deflation
Thailand’s headline consumer price index for much of 2025 registered negative annual growth, but senior government economists and statisticians insist that this does not constitute broader deflation in the economy.
Throughout the year, successive monthly readings showed headline inflation dipping below zero as a result of falling global energy prices, reduced electricity tariffs and lower fresh food costs — all factors that pushed the overall price level down compared with the previous year.
The Trade Policy and Strategy Office of the Ministry of Commerce reported periodic negative inflation readings, with figures in months such as June and November showing year-on-year declines in the headline index.
Despite these declines in headline inflation, officials have stressed that core inflation — which excludes volatile components such as energy and fresh food — remained positive, reflecting underlying domestic price pressures and sustained consumer demand in many sectors.
“While headline figures have been below zero, this does not meet the broader criteria for deflation,” said the Director-General of the office, noting that core inflation metrics and employment trends did not align with classic deflationary conditions.
Deflation typically implies a generalised and persistent fall in prices across a wide range of goods and services driven by weak demand and contracting economic activity.
In contrast, Thailand’s negative headline inflation has been driven largely by specific factors such as lower global commodity prices and targeted government cost-of-living measures that reduced utility and fuel costs.
Authorities have also pointed to rising prices in other categories, including prepared foods, services and housing rents in some months, which indicate that price pressures exist outside the most volatile components of the index.
While some economists and outside observers have flagged the rare occurrence of consecutive negative headline inflation readings as a potential risk signal, the government’s economic agencies and the central bank have maintained their position that the conditions for true deflation have not been met.
The Bank of Thailand’s assessments have similarly noted that although inflation remains below the official target range of one to three per cent and requires monitoring, there is no definitive evidence of demand-driven deflationary trends.
Looking ahead to 2026, both the Ministry of Commerce and financial authorities expect inflation to trend back toward positive territory as energy prices stabilise, core price pressures persist and economic activity — including tourism — gains momentum.
Policymakers continue to coordinate fiscal and monetary measures to support domestic demand and guard against any protracted period of weak price growth that could undermine broader economic confidence.
Throughout the year, successive monthly readings showed headline inflation dipping below zero as a result of falling global energy prices, reduced electricity tariffs and lower fresh food costs — all factors that pushed the overall price level down compared with the previous year.
The Trade Policy and Strategy Office of the Ministry of Commerce reported periodic negative inflation readings, with figures in months such as June and November showing year-on-year declines in the headline index.
Despite these declines in headline inflation, officials have stressed that core inflation — which excludes volatile components such as energy and fresh food — remained positive, reflecting underlying domestic price pressures and sustained consumer demand in many sectors.
“While headline figures have been below zero, this does not meet the broader criteria for deflation,” said the Director-General of the office, noting that core inflation metrics and employment trends did not align with classic deflationary conditions.
Deflation typically implies a generalised and persistent fall in prices across a wide range of goods and services driven by weak demand and contracting economic activity.
In contrast, Thailand’s negative headline inflation has been driven largely by specific factors such as lower global commodity prices and targeted government cost-of-living measures that reduced utility and fuel costs.
Authorities have also pointed to rising prices in other categories, including prepared foods, services and housing rents in some months, which indicate that price pressures exist outside the most volatile components of the index.
While some economists and outside observers have flagged the rare occurrence of consecutive negative headline inflation readings as a potential risk signal, the government’s economic agencies and the central bank have maintained their position that the conditions for true deflation have not been met.
The Bank of Thailand’s assessments have similarly noted that although inflation remains below the official target range of one to three per cent and requires monitoring, there is no definitive evidence of demand-driven deflationary trends.
Looking ahead to 2026, both the Ministry of Commerce and financial authorities expect inflation to trend back toward positive territory as energy prices stabilise, core price pressures persist and economic activity — including tourism — gains momentum.
Policymakers continue to coordinate fiscal and monetary measures to support domestic demand and guard against any protracted period of weak price growth that could undermine broader economic confidence.
