Thai inflation eased to 2.4% yoy in June, within BoT’s target range. Core inflation rose to 1.2%. Commerzbank’s Charlie Lay expects BoT to hold rates at 1% through August’s meeting and possibly year-end, supporting steady USD/THB near range highs.

Key Points

• USD/THB Trend: Edged higher on easing Thai inflation data, supporting expectations of a steady BoT policy stance.

• Inflation Data: June inflation eased to 2.4% yoy from 2.8% in May; core inflation rose slightly to 1.2% yoy; energy and non-food prices moderated.

• Policy Outlook: Data reinforces case for BoT to hold rates at 1% through August meeting and possibly year-end, barring energy or food price shocks.

Inflation Trends Support Stable Currency Outlook

Thailand’s headline inflation eased for a second straight month in June, falling to 2.4% year-on-year from 2.8% in May, coming in below the Bloomberg consensus of 2.7%. This keeps inflation comfortably within the Bank of Thailand’s (BoT) target range of 1-3%, with a year-to-date average of just 1.1%. According to Commerzbank’s Charlie Lay, this moderation follows a steady pickup since April, after negative readings persisted from April 2025 through March 2026. Food prices remained stable at 1% yoy, while non-food prices slowed to 3.3% from 4%, largely due to decelerating energy costs, which dropped to 13.7% yoy from 18.1% previously.

Core Inflation and Policy Forecasts Remain Contained

Core inflation, excluding food and energy, ticked up slightly to 1.2% yoy, surpassing the 1.1% consensus estimate but still modest. The Ministry of Commerce has maintained its 2026 inflation forecast at 1.5-2.5%, citing supportive factors such as lower electricity tariffs and ample meat supplies that should help offset price pressures. Inflation is expected to remain above 2% for much of the second half of the year, partly due to a favorable base effect from last year’s weaker figures. However, easing energy costs are projected to further moderate overall price growth, reinforcing a relatively stable macroeconomic backdrop for Thailand heading into the latter half of 2026.

BoT Likely to Maintain Rates Amid Manageable Risks

Given these trends, Commerzbank expects the BoT to hold its policy rate at 1% during its upcoming meeting on 26 August, with the possibility of maintaining this stance through year-end. The central bank appears to view current inflation dynamics as manageable and supportive of broader economic activity, rather than warranting tightening. Nonetheless, risks remain, particularly from a potential rebound in global energy prices or unexpected food price increases linked to El Niño weather patterns. These factors could pressure inflation upward, though policymakers currently see limited urgency to adjust rates. As a result, USD/THB is expected to stay within recent trading ranges, with the currency pair currently hovering near its range highs as markets price in continued policy stability from the BoT.

Source : Thai Baht: Range-bound after inflation data against dollar – Commerzbank

Other People are Reading

Britain’s workforce could shrink by two million people if governments keep leaning on stealth taxes, the Office for Budget Responsibility has warned, in analysis that lands squarely on the desk of prime minister-in-waiting Andy Burnham and should alarm every employer in the country.

The fiscal watchdog’s latest long-term sustainability report concludes that repeated tax rises under both Conservative and Labour governments are inflicting growing damage on the economy, with each fresh raid delivering diminishing returns. It also cautioned that stealth tax raids would become harder to sustain as AI threatens to eliminate one in ten jobs.

For small business owners already wrestling with recruitment, the central finding is stark. If future governments permanently uprated income tax thresholds in line with prices rather than earnings, two-thirds of all workers, more than 20 million people, would become higher-rate taxpayers within a few decades. That is every full-time worker, even those on the minimum wage

Under that scenario, the OBR estimates “labour supply could fall by around two million” workers by 2075. For those people, work would simply no longer pay. For the firms hoping to hire them, the labour pool gets shallower still.

The mechanism is one SME employers know well. Rishi Sunak froze income tax thresholds in cash terms until 2028 and Rachel Reeves extended the policy into the next decade. OBR data show the freeze is already set to pull five million more people into the higher and additional rate bands, and fiscal drag is already pushing millions of Britons into higher tax brackets, among them nurses, teachers and supermarket managers. For business owners, that means staff demanding higher gross pay just to stand still, at a time when payroll costs are climbing anyway.

David Miles, an executive member of the OBR, said stealth raids might look politically easier than raising headline rates, but the cost is real. “It would be painful, because … if you carry on doing that decade after decade, it isn’t too far down the road until the great majority of people are higher rate taxpayers,” he said. That would affect people’s “willingness to work, willingness to stay in the UK [and] to save, to pay taxes if income tax rates rose by that amount. So it’s not a painless road to go down”.

The backdrop is grim. National debt is close to £3tn, around 95 per cent of GDP, and the watchdog has previously warned that debt could hit almost 300 per cent of GDP within 50 years. The OBR says Burnham, or any future prime minister, could face tax rises or spending cuts worth as much as £120bn to stabilise debt at current levels. Business Matters reported last year that the watchdog was already warning of significant tax rises ahead; this report suggests the well is running dry.

The tax burden is on course to reach a peacetime high of 38.5 per cent of GDP by the start of the next decade, and Miles warned Britain was “catching up” with higher-tax continental Europe. Of relying on further rises, including proposals from Burnham allies for wealth taxes, he said: “It’s not that the pain just increases a little bit, it starts increasing exponentially.”

That leaves spending. Many point to the pension triple lock, which the OBR says is making “a very significant contribution” to upward pressure on spending. Linking it to inflation alone would save £160bn a year in today’s money by 2075. Lord O’Neill of Gatley, tipped as Burnham’s key economic adviser, has called the lock “bonkers”. Burnham has committed to keeping it.

Jeremy Hunt, the former chancellor, put it bluntly: “The OBR makes it clear that unless we tackle the triple lock we will end up with totally unsustainable levels of both tax and debt.”

For the SMEs that employ most of Britain’s private sector workforce, the message is uncomfortable. Whoever occupies Number 10, the era of quiet tax rises doing the heavy lifting is ending, and the bill is heading somewhere.

Jamie Young

Jamie is Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops.

When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.

Rachel Reeves has warned Andy Burnham that he will be hit by “shocks and challenges” from the moment he walks into Downing Street, urging the prime minister-in-waiting to arrive with a “worked through plan”, advice that business owners bruised by two years of policy surprises may permit themselves a wry smile over.

In what could be one of her final major interviews as chancellor, Reeves told BBC One’s Sunday with Laura Kuenssberg: “It is important that when Andy walks through that door he has a worked-through plan, because governing is hard in Britain, and lots of challenges and shocks will come his way.”

For the UK’s 5.5 million small firms, the handover is now all but a formality. Burnham has been backed by 322 of Labour’s 403 MPs, one short of the number that would make a rival challenge mathematically impossible. If no one else enters the contest, he becomes Labour leader on 17 July and prime minister on 20 July.

That gives business owners barely a week to prepare for a new occupant of No 10, and, in all likelihood, a new chancellor. The question of who takes the keys to No 11 matters as much to SMEs as the identity of the prime minister, given the autumn Budget will land within months of the handover.

Burnham has already sketched out what he calls the “biggest rebalancing of power Britain has ever seen”, including a new No 10 North hub to push power and resources out of Whitehall. He has hinted at an early cost of living package, accepting that “people can’t wait for ever for change”. For high street firms, his most concrete offer so far is a pledged 20 per cent business rates cut for pubs and hospitality businesses, funded by higher levies on online retailers’ warehouses.

He will need to win the sector round. Exclusive research shared with Business Matters found eight in ten SME owners fear what a Burnham premiership would mean for their business, unease rooted in his interventionist instincts as much as any specific policy.

Reeves, for her part, insisted her successor inherits a healthier economy than the one she took on. “Andy will take over an economy that is much stronger than the one I inherited from the Tories just two years ago,” she said, pointing to a strategy designed “to return stability to the economy, to enable interest rates to come down”. The Bank of England held Bank Rate at 3.75 per cent in June, down from its recent peaks but with the next decision not due until 30 July.

The picture on the ground is less flattering. The latest ONS figures show real household disposable income per head fell in the first quarter, and the country’s debts are expected to be higher at the end of this parliament than when Labour took power, a squeeze that feeds directly into weak consumer demand for small firms.

Reeves conceded the government had lost the confidence of MPs and the public because “people are impatient for change”, and admitted she was “absolutely certain, if we could go back two years, there are choices that I made that would be different”.

Former transport secretary Louise Haigh, a key Burnham ally, said he had been planning for this moment “for at least the last year”. Reeves saw nothing wrong in that: “It’s perfectly reasonable for people to have ambition … And I want him to be ready for that.”

Her more personal advice, drawn from the day she was photographed in tears at prime minister’s questions, was simpler: “Don’t cry on national television.”

For business owners, the message is the same one Reeves gave Burnham. The next fortnight will settle who governs. What matters is whether the plan survives the first shock.

Jamie Young

Jamie is Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops.

When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.

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