BANGKOK, THAILAND – Thailand’s consumer prices fell for a ninth consecutive month in December 2025, leaving the full year in mild deflation.
Prices fell again in December
The annual inflation rate in December stood at -0.28% compared with the same month a year earlier, marking the ninth straight month in negative territory. For 2025 as a whole, inflation was -0.14%, the first yearly decline since 2020.
Cheap energy drives overall deflation
According to the Kasikorn Research Center, falling energy costs were the main driver of the deflationary trend. Energy prices dropped by 7.0%, pulling overall inflation down by 1.7 percentage points.
The global slump in oil prices and government measures such as subsidies for liquefied petroleum gas (LPG) and reduced diesel and electricity tariffs kept household energy bills low. These policies helped maintain lower costs even as other parts of the consumer basket became more expensive.
Food costs rise despite lower fuel bills
In contrast to energy, prices for domestic vegetables and fruit increased by 5.2% in December. Analysts at Kasikorn Research Center linked this surge to weather-related supply disruptions and statistical base effects.
“Flooding at the end of the year and a low comparison base from 2024 pushed up prices for limes, coriander and other fresh foods,”
said analysts at Kasikorn Research Center.
As a result, food inflation turned positive for the first time in eight months, partly offsetting the downward pressure from cheaper fuel and utilities.
Short-term relief, long-term warning sign
On the surface, falling prices eased pressure on household budgets, with cheaper petrol, electricity and gas bills supporting consumers. However, persistent deflation was described as a dangerous signal for the broader economy.
Extended periods of falling prices could lead to investment freezes if companies no longer believed they could raise prices in the future. Public debt would also become harder to service in real terms, forcing the Bank of Thailand to closely monitor the balance between supporting growth and preserving stability.
Outlook for 2026: Modest recovery expected
Experts at Kasikorn anticipated a slight return to positive inflation in 2026, forecasting a rate of +0.4%. They cited easing downward pressure from energy, moderate increases in food prices and further growth in core inflation as the main factors behind the projected upturn.
Even so, deflation risks were seen as persisting. A renewed downturn in the global economy or further declines in commodity prices could derail the expected recovery and push Thailand back towards deeper price falls.
Central bank weighs next move
The Thai central bank faced a delicate policy dilemma amid the extended spell of deflation. If negative inflation continued, it could cut interest rates to stimulate economic activity and encourage borrowing and investment.
At the same time, overly loose monetary policy might fuel rising indebtedness and create new asset bubbles. Developments in consumer prices over the coming months were expected to be decisive for the country’s overall economic strategy.
For now, Thai consumers experienced a period of cheaper living costs, but with an uncertain outcome for jobs, wages and future investment across the economy.