Thailand's inflation eyed to inch down 3.3%

But the government must focus on exports.

According to DBS, headline inflation is set to ease marginally to 3.3% YoY in October, from 3.4% in the September. Meanwhile, core inflation is expected to hover around 2.0% YoY.

Here's more from DBS:

Given that the central bank has a target for core inflation at between 0.5-3.0%, inflation is not a near term concern. Instead, the focus will be on cushioning the impact of expected export deterioration in the coming months.

This has also been reflected in the BoT’s decision to slash the policy rate by 25bps to 2.75% at the previous monetary policy meeting. While the authorities have a firm pro-growth stance, we caution that price pressures are likely to mount in 2H13. With low interest rates spurring already robust loan growth, some price pressures are inevitable.

Moreover, the government has been maintaining a pro-growth stance through the rice-pledging scheme and the first car buyer scheme. The THB 300 daily minimum wage is also set to be rolled out nationwide early next year. Average inflation is expected to reach 3.7% in 2013 and some form of monetary tightening may be needed by end-2013.

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