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Thai June headline CPI falls 1.57% y/y, less than forecast

* Headline CPI seen falling 0.7%-1.5% this year

* Low foreign tourist numbers pressure inflation (Adds detail, forecasts, context)

BANGKOK, July 3 (Reuters) – Thailand’s headline consumer price index (CPI) in June dropped at a slower pace of 1.57% from a year earlier, following the end of a government utilities subsidy to ease the impact of the coronavirus, the commerce ministry said on Friday.

The decline was also less than a forecast fall of 2.80% in a Reuters poll, and May’s 3.44% contraction.

The core CPI index, which strips out food and energy prices, dipped 0.05% from a year earlier, the first drop in more than a decade. That compared with a forecast of 0.0%, and May’s 0.01% rise.

Headline inflation is likely to be negative every month in the second half due in part to last year’s high comparative figures, ministry official Pimchanok Vonkorpon told a briefing.

“The main factor pressuring inflation in the second half is the tourist sector because there will not be many foreign tourists,” she said.

A Thai tourism body on Tuesday said the country would see at most 8 million foreign tourists this year, down 80% from a year earlier, as the coronavirus pandemic hits global travel.

Last year’s 39.8 million foreign tourists spent the equivalent of 11% of Thailand’s GDP. The central bank expects just 1 million tourists in the second half.

In the January-June period, the headline CPI fell 1.13% year-on-year while the core index rose 0.32%, the commerce ministry said.

It forecast the headline CPI to fall between 0.7% to 1.5% this year, Pimchanok said.

(Reporting by Kitiphong Thaichareon Writing Orathai Sriring; Editing by Martin Petty)

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