• The inflation rate in Thailand for June 2025 decreased for the third consecutive month to -0.25%, with ongoing risks of entering a deflationary period, primarily pressured by supply factors such as energy prices and fresh produce.

• Looking ahead to Q3 2025, Thai inflation may continue to contract but is expected to turn positive in the final quarter of the year.

• The Kasikorn Research Center maintains its inflation forecast for Thailand in 2025 at 0.3%, influenced by declining global energy prices, the import of cheap goods from China, and a slowing Thai economy.

While one hand quietly reaches into pockets to pay for daily necessities, the other hand of the Thai economy is weighing... are we entering a "deflationary period"?

June 2025 marks the third consecutive month that Thailand's inflation rate is "negative," with the latest figure reported by the Kasikorn Research Center at -0.25%. This is a result of supply-side pressures, particularly the decline in energy prices in line with global markets and the drop in fresh produce prices due to good harvests earlier in the year.

Stable Prices, But High Risks: When Negative Inflation May Not Always Be Good News

The infographic clearly shows that the heart of this slowdown is “energy” and “fresh food,” which are two major categories consumers encounter daily. At first glance, lower prices may seem beneficial, but for the overall economy, if prices continue to decline without strong demand, it reflects stagnation, or what economists fear could lead to “deflation,” which is just as dangerous as soaring inflation.

Looking Ahead: Q3 May Still Contract, But Q4 Could See Signs of Recovery

The Kasikorn Research Center continues to estimate Thailand's inflation for the entire year of 2025 at only 0.3%, anticipating that inflation will remain negative in Q3 but may trend “back to positive” in the final quarter of the year if fundamental factors begin to strengthen.

Potential supports in Q4 include:

  • Crude oil prices may recover if the global economy improves.

  • Domestic consumption may accelerate due to government measures.

  • Last year's low price base may make inflation comparisons start to show positive signs.

Three Main Pressures Holding Back Inflation Recovery

  1. Global oil prices remain low: Crude oil prices are expected to weaken further in the second half of the year, particularly Dubai oil, which is moving within a limited range.

  2. Import of cheap goods: Especially from China, continues to pressure domestic prices downward.

  3. The Thai economy remains weak: Both household and business sectors, particularly low-income groups, have not fully recovered.

Conclusion from the Numbers: Low Prices… Not Yet a Sign of Recovery

Even though some items have become cheaper, if incomes do not increase, confidence does not recover, and consumption remains sluggish, Thailand may need to closely monitor the “deflationary period.” In the economic world, falling prices do not always mean a decrease in the cost of living; rather, they reflect the overall weakness of the system.

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