● Headline inflation edged marginally higher in November (0.2% YoY; consensus: 0.3%; Oct: 0.1%)

• Remained below the Bank of Thailand’s (BoT) target range of 1.0-4.0% for six straight months.
• MoM: -0.1% (Oct: -0.2%).
• Core inflation: increased marginally to 0.5% YoY (Oct: 0.4%), but remained amongst the lowest in 27 months, indicating subdued demand.

● Higher CPI growth led by softer decline in prices of non-core goods (-0.5%; Oct: -0.8%), in addition to a low-base effect

• Transport & communication (-2.0%; Oct: -3.4%): softer decline as domestic fuel prices registered smaller YoY contraction (Gasohol 95: -6.8%; Oct: -12.6%).
• Apparel & Footwear (0.3%; Oct: -0.3%): first growth in six months, in part reflecting increased purchases in anticipation of the year-end festivities.

● Weak inflationary pressure across the advanced and developing economies

• Eurozone (1.0%): rose to a three-month high, albeit remaining below the European Central Bank’s target of 2.0%, due to higher food, alcohol and tobacco costs.
• Indonesia (3.0%): withered to a 7-month low on steeper deceleration in energy index.
• South Korea (0.2%): first gain in four months, but remained weak due to a high-base effect from a surge in prices of farm products and oils.

● 2019 CPI forecast maintained at 0.5-1.0% (YTD: 0.7%; 2018: 1.1%)

• Inflationary pressure to remain benign amid cooling global growth, continued uncertainties over the US-China trade feud and rising geopolitical tension.
• After slashing the policy rate twice in 2019 to match a record-low of 1.25%, we expect the BoT to pause its monetary easing, with a potential for it to be continued next year, should economic growth and external development, specifically those pertaining to the trade war, disappoint.

Source: Kenanga Research - 3 Dec 2019