Inflation in Thailand

A short history of inflation in Thailand

The Asian Financial Crisis (1997 to 1998)

The Asian financial crisis began in Thailand. The baht had been pegged to a basket dominated by the United States dollar, and as the dollar rose in the mid-1990s Thai exports lost competitiveness while short-term foreign borrowing funded a property boom. Reserves were exhausted defending the peg and on 2 July 1997 it was abandoned; the baht lost roughly half its value within months and the contagion spread across the region.

Inflation Targeting (2000 onwards)

Inflation rose into double figures briefly as import costs jumped, but the deeper effect was a recession and a banking clean-up. The Bank of Thailand adopted an inflation target in 2000, and Thai inflation has been low since, often at the bottom of the regional range, helped by domestic food production and administered energy prices.

Post-Covid Inflation (2021 to 2023)

In Thailand, prices rose fastest in August 2022, at 7.9%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.