The Ministry of Commerce reported May inflation at 2.53% YoY, up from 2.47% YoY in April and inline with market estimates of 2.50% YoY. On a monthly basis, the May CPI rose a for a 5th month by 0.39% MoM, pressured by the 1.14% MoM increase in food and beverage product prices (33.0% of CPI), led by the rise in meat, poultry, fresh vegetables and eggs in the start of the hot season. Transportation and communication prices (26.8% CPI) dropped 0.75% MoM after domestic fuel prices dropped with lower oil prices with the impact from the government 3-month suspension of the oil fund collections in an attempt to relieve the burden on consumers.


So what?

The BOT meets again on the 13th June, we’re not expecting any fireworks and expect that the BOT will maintain its 3% policy rate. Any rate hike will not happen until (1) The BOT sees evidence of inflation above 3% and (2) That won’t happen until the latter part of 2H12.

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