ttb analytics forecasts that inflation for 2022 will reach 2%, preparing for a peak inflation rate of 4% in the first quarter, before gradually decreasing for the remainder of the year as various domestic and international price pressures ease.

According to the TTB Economic Analysis Center or ttb analytics, the pressure from the energy sector, particularly fuel prices, remains a significant factor keeping inflation high in 2022. Although Thailand benefits from government measures to stabilize certain fuel prices, this is insufficient to alleviate the rapidly rising price pressures. It is expected that after entering the second quarter of 2022, energy price pressures will ease somewhat, but will persist until oil producers can manage to gradually increase production capacity to meet targets in the third quarter.

Meanwhile, the cost of fresh food has increased in line with rising oil and global commodity prices, coupled with the outbreak of swine disease in Thailand, which has reduced pork production and driven up domestic pork prices. It is anticipated that Thailand may need at least six months to increase pig farming and gradually boost production to meet market demand, resulting in sustained pressure on fresh food prices until the end of 2022.

Furthermore, the pressure on core inflation (inflation excluding fresh food and energy) is expected to ease in early 2022, as the Omicron variant spreads rapidly without causing severe illness. It is estimated that this impact will only last through the first quarter of 2022, before domestic economic conditions and core inflation gradually increase again until the end of the year.

Supply Bottlenecks Expected to Normalize by Late 2022

            Additional inflationary pressures stem from supply bottlenecks in certain industries, particularly those linked to domestic producers facing new waves of outbreaks, especially in Europe and the U.S. However, it is expected that production bottlenecks and high shipping costs will clearly pressure prices of goods both within and outside the core inflation rate until the third quarter, before easing towards the end of the year.

            Shipping costs have gradually decreased since late 2021, but it is anticipated that it will take a long time to return to normal price levels, around late 2024.

      Additionally, high supply-side pressures, combined with the depreciation of the Thai baht since 2021, will result in an average inflation rate of 2.7% until the end of Q3/2022, peaking in the first quarter and gradually decreasing until the end of the year as various factors ease, with the overall inflation rate for the year averaging at 2%.

           However, during this period of rapidly rising inflation, citizens must adjust their spending habits accordingly. In terms of government oversight of the economy, in addition to expediting policies to reduce living costs, such as stabilizing fuel prices and providing assistance through the state welfare card to citizens, it may also help manage production levels to meet domestic demand where feasible, to further alleviate inflationary pressures.