Deflation is defined as a sustained fall in the general price level by the IMF, and is said to occur when the inflation rate falls below 0%.
Unless you are the Bank of Thailand. Consumer prices fell last month for the first time since Sept. 2009, but the central bank isn't too worried; they're just calling it "negative inflation" for now.
“The MPC viewed that negative inflation this time isn’t a signal of deflation,” Assistant Governor Mathee Supapongse said on Tuesday, because it’s temporary and caused by supply-side issues rather than from declining demand. The central bank sees "negative headline inflation" until the second quarter, and price gains in the first half of the year will be "mildly negative", he said. .
The central bank, which began using headline inflation to guide monetary policy from January, expects it to turn positive from the third quarter, while the rate for the full year may be below an earlier forecast of 1.2%, he said. In an open letter to the finance minister on Feb. 2, the central bank said the negative rate of headline inflation at present "neither signals a deflationary environment nor constitutes risks to financial instability" because the decline in price levels isn't broad-based, and inflation expectations remain close to the target, while lower oil prices will boost domestic demand.
Analysts are less sanguine. After the data, ANZ published a note titled `Thailand: The return of deflation', and said there is a significant risk that the inflation rate will breach the lower end of the central bank's target of 1%. Barclays estimates inflation is likely to remain negative for much of the first half, and lowered its 2015 average forecast to 0.2%.
Headline inflation will remain negative for "several months", and core inflation will also fall, Nomura said, adding that it expects the central bank will ease rates, starting at its March meeting. In an earlier report, it noted the "persistent domestic demand weakness" and stuck with its forecast of GDP growth of just 3.3% this year, lower than the central bank's 4%.
"It's a technical deflation, as CPI is expected to fall for some time," said Santitarn Sathirathai, Singapore-based economist for Southeast Asia at Credit Suisse Group AG. While Thailand hasn't reached  that point of low wages and a broad-based fall in product prices, "risks of deflation are imminent," he said. Credit Suisse has cut its inflation forecast to 0.6 percent this year from 2.2. percent, and said consensus estimates for average inflation are "still too high".