Thailand is not yet in a state of deflation, but an influx of cheap Chinese goods poses a significant threat to local businesses, according to a new report from Krungthai Bank.

 

The warning comes as Thailand records its fifth consecutive month of negative inflation.

 

The Trade Policy and Strategy Office (TPSO) of the Ministry of Commerce reported that headline inflation in August fell by 0.79% and is expected to continue its decline in September. For the first eight months of the year, headline inflation rose by a mere 0.08%.

 

Poon Panichpibool, a capital markets strategist at Krungthai Bank, explained that the negative inflation is primarily due to supply-side factors such as a good harvest of fresh fruits and vegetables and low rice prices.

 

He also noted that government measures to ease the cost of living, such as electricity subsidies, were a significant factor.

 

“The country has not entered a state of deflation because there is no widespread price drop across the board,” he said.