“Inflation in April and the second quarter should return to positive territory from negative growth over the past 15 months, due to increasing oil prices, while the price of farm crops, especially vegetables, will rise as a result of lower production caused by the drought,” Somkiat Triratpan, inspector-general of the ministry and director of its Policies and Trade Strategies Bureau, said yesterday.

The ministry predicts year-on-year inflation in the current quarter will be 0.3 per cent, while quarter-on-quarter inflation is forecast to come in at 0.85 per cent.

With this expected return to positive inflation growth, the ministry has maintained its full-year inflation projection at between zero and 1 per cent.

This is based on the assumption of an average Dubai oil price of US$30-$40 (Bt1,053-Bt1,404) per barrel, the average exchange rate of the baht to the US dollar being in the Bt36-Bt38 range, and Thai economic growth of between 2.8 per cent and 3.8 per cent this year.

The ministry will, however, revise the full-year inflation projection in May, in light of the positive trend of rising inflation, Somkiat said.

The government’s stimulus package to encourage consumer spending, plus travel and spending during the upcoming Songkran Festival, should promote slightly higher inflation in the short term, he added.

The ministry reported that the Consumer Price Index (CPI) had weakened again in March, by 0.46 per cent year on year – the 15th consecutive month of decline.

The month-on-month CPI rose 0.21 per cent, due to rising domestic retail oil prices.

he CPI in the first quarter was 0.5 per cent lower than in the same period last year.

Last month, core inflation – excluding volatile fuel and food prices – rose 0.75 per cent year on year, and 0.01 per cent month on month.

Core inflation in the first quarter was 0.67 per cent, year on year.

Bank of Thailand Governor Veerathai Santiprabhob said yesterday that although inflation had again been negative in March, the central bank would continue to manage the economy by using inflation targeting because the recent trend had been due to the fall in oil prices, which would have only a short-term impact.

“When we manage [the economy], our inflation forecasts are for the next 12 to 24 months,” he said.

Veerathai added that although inflation was still in negative territory, the economy in the first two months of the year had showed signs of a gradual recovery, and the country had not experienced deflation.

The Bank of Thailand is maintaining its 2016 inflation target at 2.5 per cent, plus or minus 1.5 percentage points.