# Thailand CPI Cools to 2.0% as BoT Holds Rates and Baht Stays Weak

- Link: https://www.thailand-business-news.com/banking/322662-thailand-cpi-cools-to-2-0-as-bot-holds-rates-and-baht-stays-weak
- Published: 2026-08-14T06:55:00+07:00
- Author: Chloe Zhou

**Thailand’s July CPI eased to 2.0% yoy, below forecasts, driven by softer fuel 
prices. Core inflation remains manageable at 0.8%. BoT expected to hold rates at
1% through year-end amid subdued demand. THB strengthened to 33.00/USD but remains
among Asia’s weakest currencies in 2025.**

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## Key Points

 *  **Inflation**: July CPI rose 2.0% yoy, below the 2.4% consensus and June’s reading,
   marking the lowest since March; core CPI averaged 0.8% YTD, under the government’s
   1.5% forecast.
 *  **Policy Outlook**: BoT likely to hold rates at 1% through year-end, citing 
   manageable inflation and subdued demand pressures, per Assistant Governor Don
   Nakornthab.
 *  **FX**: USD/THB fell to 33.00, a seven-week low; THB still down 4.5% YTD, underperforming
   regional peers.

### Inflation Eases Below Expectations

Thailand’s **July Consumer Price Index (CPI) rose 2.0% year-on-year**, falling short
of the Bloomberg consensus estimate of 2.4% and down from June’s 2.4% reading. This
marks the **lowest inflation print since March**, driven largely by **softer retail
fuel prices** that eased overall cost pressures. Despite the headline moderation,**
core CPI has been gradually climbing**, averaging **0.8% over the first seven months
of 2025**—still comfortably below the government’s full-year core inflation forecast
of 1.5%. Commerzbank strategists note that while underlying price pressures persist,
they remain **manageable and well-contained**, suggesting inflation dynamics are
not yet a pressing concern for policymakers or the broader economy.

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### Steady Monetary Policy Outlook

Given the **benign inflation environment**, the **Bank of Thailand (BoT) is expected
to hold its policy rate at 1% through the remainder of 2025**. Commerzbank strategists
see **little justification for a shift in monetary policy** at this stage, as demand-
side pressures remain subdued and inflation risks appear skewed to the downside.
This view was reinforced by **BoT Assistant Governor Don Nakornthab**, who recently
indicated that inflation is **under control** and could potentially **undershoot
earlier projections** due to weak consumer demand. The central bank’s cautious, 
wait-and-see stance reflects confidence that current price trends do not warrant
tightening, while also leaving room for flexibility should conditions change later
in the year.

**\

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### Currency Performance Remains Weak Despite Recent Gains

In foreign exchange markets, the **Thai baht (THB) strengthened modestly**, with**
USD/THB falling 0.2% to 33.00**, its **lowest level since June 22**. The currency
has now **gained for four consecutive sessions**, aided by **rising global gold 
prices**, which have historically supported the baht given Thailand’s gold trade
dynamics. Despite this short-term rebound, the **THB remains the third worst-performing
currency in Asia this year**. On a year-to-date basis, the baht has **depreciated
4.5% against the US dollar**, a **significantly steeper decline** than the **average
1.9% drop** seen among other Asian currencies excluding Japan. This underscores 
that, despite recent stabilization, the baht continues to face **broader structural
and cyclical headwinds** relative to regional peers.

**Source** : [Thai Baht: Benign inflation keeps BoT on hold – Commerzbank](https://www.fxstreet.com/news/thai-baht-benign-inflation-keeps-bot-on-hold-commerzbank-202608112028)