Thailand feels the Middle East energy shock as diesel rises ฿0.70 and gasoline ฿0.80. Inflation hits 2.53%, while the Fuel Fund deficit reaches ฿83.291bn. Yet consumer confidence rebounds after ฿140bn in government-backed spending across the economy.
Thailand was hit by a fresh fuel-price shock on Wednesday as the Middle East crisis drove global energy costs higher, pushing diesel up ฿0.70 per litre and gasoline and gasohol up ฿0.80. The increase came as headline inflation accelerated to 2.53% in August, with prices rising across 310 of 464 monitored items. At the same time, the Oil Fuel Fund deficit deepened to ฿83.291 billion, worsening by ฿2.819 billion in one week while subsidies cost about ฿500 million daily. Yet the economic picture is sharply divided. Consumer confidence has staged its first broad recovery in six months, helped by more than ฿140 billion circulated through Thai Helps Thai Plus, firmer farm prices and stronger spending expectations. However, the programme expires in September, just as fuel, food and transport costs intensify and the Chamber of Commerce identifies September and October as pivotal for the economy.
Thailand raised fuel prices on Wednesday as the Middle East crisis pushed global energy costs sharply higher. Diesel increased by ฿0.70 per litre. Gasoline and gasohol rose by ฿0.80 per litre. The increases took effect nationwide on September 9. They came as inflation accelerated and the Oil Fuel Fund sank deeper into deficit.
The Fuel Fund Management Committee approved the increases at its meeting on Tuesday. The fund now carries a deficit of ฿83.291 billion. Notably, that shortfall widened by ฿2.819 billion in just one week. Its subsidy burden is also running at approximately ฿500 million every day.
In parallel, Thailand is facing stronger price pressures across energy, food and transport. Headline inflation reached 2.53% in August. That marked the fifth consecutive monthly increase. Moreover, prices rose across 310 of 464 items monitored by the Ministry of Commerce.
US-Iran crisis drives oil higher as Thailand’s Fuel Fund deficit deepens under massive daily subsidies
Much of the immediate pressure is coming from international energy markets. The confrontation between the United States and Iran has sent oil prices higher. Meanwhile, concerns surrounding shipping through the Strait of Hormuz have intensified. Prospects for negotiations to ease tensions and reopen shipping lanes remain bleak.
Global crude prices have moved towards $95 per barrel. Refined products have risen even more sharply. Singapore diesel surged beyond $172 per barrel on September 8. Gasoline climbed to approximately $137 per barrel. Consequently, Thailand faces sharply higher costs for imported fuel.
The international crisis has also remained highly volatile. The United States continues its blockade of Iran amid continuing military operations. Separately, Yemen’s Houthi militia launched a drone raid against southern Saudi Arabian facilities on Tuesday. The attack added another threat to energy supplies across the region.
Against that backdrop, Thailand’s Fuel Fund has continued absorbing part of the international price surge. However, its financial position has deteriorated rapidly. The accumulated deficit now exceeds ฿83 billion. At roughly ฿500 million daily, subsidies are placing further pressure on the fund.
In response, Tuesday’s committee meeting adjusted subsidies and levies across several fuel products. Regular diesel received another ฿0.03 subsidy per litre. Total support therefore increased to ฿5.80 per litre. Even with that subsidy, regular diesel now retails at ฿39.84 per litre.
Fuel subsidies shift across diesel and gasohol as Thailand passes more global oil costs to motorists
B20 diesel received a different adjustment. Its subsidy was reduced by ฿0.06 per litre to ฿10.06. The resulting retail price stands at ฿34.84 per litre. Premium diesel, by comparison, carries a levy of ฿1.50 per litre.
The committee also changed its intervention across gasoline and gasohol products. The gasoline levy fell by ฿0.27 to ฿4.55 per litre. Nevertheless, ordinary gasoline climbed to ฿48.08 per litre. It is now significantly above the retail prices of the major gasohol products.
Gasohol 95 received another ฿0.18 subsidy, bringing total support to ฿2.37 per litre. Its retail price reached ฿39.09. Likewise, Gasohol 91 received another ฿0.18 subsidy. It now retails at ฿38.72 per litre.
Gasohol E20 support increased by ฿0.08 to ฿5.77 per litre. Accordingly, its retail price reached ฿34.09. Gasohol E85 moved in the opposite direction. Its subsidy fell by ฿0.50 to ฿2.60, leaving its retail price at ฿30.03.
These adjustments show the scale of intervention still operating within Thailand’s retail fuel market. Yet international prices continue moving higher. The fund must therefore balance domestic retail prices against its rapidly deteriorating finances. Wednesday’s increases shifted another portion of those international costs towards motorists.
Inflation broadens across Thailand as food, fresh produce and energy costs all rise sharply through August
The timing is particularly significant because inflation has already accelerated across Thailand. Earlier this week, the Commerce Ministry reported an August Consumer Price Index of 102.67. That produced annual headline inflation of 2.53%. It was the fifth consecutive month of rising inflation.
More importantly, the increases were broad. Of the 464 goods and services monitored, 310 increased in price. Only 123 became cheaper. Another 31 remained unchanged. Thus, the latest inflation increase extended well beyond fuel and energy.
Food and non-alcoholic beverages were among the strongest contributors. Prices in that category rose by 2.99%. Other categories, excluding food and beverages, increased by 2.23%. Prepared foods have also recorded widespread increases of approximately 3% to 5%.
Fresh food has added another layer of pressure. Eggs, chicken, vegetables and fruit have all become more expensive. Stronger demand contributed to those increases. At the same time, volatile weather reduced production volumes and restricted supplies.
The Thai Helps Thai Plus programme has been one factor behind stronger demand. It increased household purchasing power during recent months. As a result, consumers had more money available for everyday purchases. The same programme has also become central to the recent improvement in consumer confidence.
Prepared food, transport and fresh produce keep inflation pressure elevated heading into year-end
Prepared meals remain another significant expense. Although price increases have moderated, menu prices remain high. The seven most popular dishes previously recorded average increases of ฿30 to ฿40 per item. Therefore, food costs continue weighing heavily on household budgets.
Energy is adding further pressure through transportation. Domestic retail fuel prices remain higher than during the same period last year. Bus fares have consequently increased as operators absorb higher fuel costs. Travel expenses are now another contributor to the inflation figures.
Core inflation has also accelerated. This measure excludes fresh food and energy. It rose to 1.44% in August from 1.34% in July. Across the first eight months, headline inflation averaged 1.37%, while core inflation averaged 0.94%.
Looking ahead, the Commerce Ministry expects inflation to remain positive during September. Fuel prices will remain an important driver. Ready-to-eat meals are also expected to stay expensive. In addition, vegetables, fruit, eggs and chicken could rise further.
Weather conditions remain important for fresh food supplies. Stronger consumer demand is also supporting prices. Higher transport costs add another layer to the picture. Together, those factors could maintain inflationary pressure through the final months of 2026.
Lower power bills offer some relief as Commerce Ministry sees inflation accelerating in fourth quarter
There are some counterweights. Electricity charges fell from ฿3.95 to ฿3.86 per unit from September. The lower tariff will remain through December. Meanwhile, personal care product prices are trending down amid intense competition and continued manufacturer promotions.
Even so, the Commerce Ministry maintained its full-year inflation forecast between 1.5% and 2.5%. The midpoint remains 2%. Officials expect third-quarter inflation of 2.37%. They then forecast an acceleration to 2.70% during the fourth quarter.
Nantapong Chiraleartpong, Director of the Office of Trade Policy and Strategy, expects continued pressure through year-end. Inflation could average more than 2% monthly during the remaining four months. The Middle East crisis and oil prices remain central to that outlook.
Domestic demand could also strengthen during the final quarter. Year-end festivals normally lift spending. Furthermore, disbursement under the 2027 government budget is accelerating. Continued government measures for consumption and tourism could provide another lift to demand.
Against that inflation backdrop, Tuesday brought a markedly stronger reading on consumer confidence. The University of the Thai Chamber of Commerce released its August survey. Confidence improved across almost every category. Significantly, it was the first broad improvement recorded in six months.
Consumer confidence rebounds after six months as Thai Helps Thai Plus injects ฿140 billion into economy
The Consumer Confidence Index climbed to 53.2. The future confidence index also increased for a third consecutive month. That measure reached 61.4 in August. Consumers therefore showed stronger expectations for the months ahead, despite continuing economic pressures.
Thanavath Phonvichai presented the findings. He is Rector and Advisory Board Chairman at the Centre for Economic and Business Forecasting. The centre operates under the University of the Thai Chamber of Commerce.
Several factors drove the improvement. Chief among them was the Thai Helps Thai Plus programme. It supported consumption while easing some pressure from living costs. Thanavath said more than ฿140 billion circulated through the economy during the previous three months.
That injection produced measurable changes in consumer attitudes. Confidence surrounding home purchases improved. Sentiment towards buying cars also strengthened. In addition, consumers became more positive about tourism spending.
Agricultural prices provided another boost. Prices increased for rice, rubber, palm oil, animal feed corn and cassava. Higher commodity prices therefore strengthened farmers’ incomes. That provided additional support for purchasing power outside major urban areas.
VAT extension and firmer farm prices support confidence while SMEs and provincial jobs remain weak
On another front, the government extended Thailand’s 7% Value Added Tax rate for another year. The rate will remain until September 30, 2027. The decision provided additional certainty over an important component of consumer and business costs.
Business confidence also improved. The Thai Chamber of Commerce Confidence Index rose to 36.0. That marked its first recovery in six months. However, the reading remains far below 100 and continues to reflect difficult operating conditions.
The chamber described Thailand’s recovery as K-shaped. Some sections of the economy are improving, while others remain weak. Small and medium-sized enterprises are among those still facing serious problems. Many continue to struggle with liquidity and restricted credit access.
Household debt is another continuing constraint. Consumers also remain concerned about living costs and retail fuel prices. In northern Thailand, flooding has created further economic damage. These pressures remain in place despite the improvement in headline confidence.
Provincial employment is also showing signs of weakening. Employment outside Bangkok has started slowing as companies adjust to higher costs. Some businesses have begun layoffs. Nevertheless, surveyed companies expect investment and employment conditions to improve during the next six months.
September and October emerge as a turning point as stimulus ends and global energy costs surge higher
The contrast leaves the next two months particularly important. Thanavath identified the period as a crucial turning point for Thailand’s economy. Thai Helps Thai Plus expires during September. Therefore, a major source of recent consumer spending is approaching its scheduled end.
The scale of that support has been substantial. More than ฿140 billion circulated through the economy within three months. Without further supporting measures, the chamber warned that purchasing power could slow immediately. September and October will therefore be critical for domestic demand.
At precisely the same time, energy costs are moving sharply higher. Global crude has moved towards $95 per barrel. Singapore diesel has exceeded $172, while gasoline reached approximately $137. Thai retail prices are consequently approaching important levels for consumers and businesses.
Regular diesel now costs ฿39.84 per litre. Gasohol 95 stands at ฿39.09, while Gasohol 91 costs ฿38.72. Ordinary gasoline is considerably higher at ฿48.08. Those prices feed directly into household, transportation and business costs.
The Fuel Fund faces the same pressure from another direction. Its deficit has reached ฿83.291 billion. Moreover, the shortfall worsened by ฿2.819 billion in one week. Daily subsidies of approximately ฿500 million continue adding to that burden.
Political uncertainty joins flood damage and SME weakness as inflation rises despite firmer confidence
Political sentiment also weakened in the Chamber of Commerce survey. Assessments of both current and future political conditions declined. Consumers and businesses remain concerned about legal uncertainties involving coalition government parties. Those concerns centre on political stability and continuity in economic policies.
The chamber also identified immediate pressures requiring attention during the final months. Flood damage in northern Thailand remains a significant economic problem. SME liquidity is another. Tourism performance will also influence activity during the final quarter.
Taken together, the latest figures show a sharp divide in Thailand’s economic picture. Consumer confidence has recorded its first broad recovery in six months. Business confidence has also turned higher after six months of weakness. Yet costs are rising across most of the inflation basket.
Thai Helps Thai Plus has circulated more than ฿140 billion through the economy. Higher agricultural prices have also strengthened farm incomes. Future consumer confidence has risen for three consecutive months. However, the programme behind much of that spending expires during September.
Meanwhile, inflation has risen for five consecutive months. Prices increased across 310 of 464 monitored goods and services. Food inflation reached 2.99%, while core inflation accelerated to 1.44%. Headline inflation now stands at 2.53%.
Thailand enters final months with stronger confidence, rising inflation and an ฿83 billion Fuel Fund gap
Energy prices are intensifying that pressure. International diesel has surged beyond $172 per barrel. Domestic regular diesel is now just below ฿40 per litre. Ordinary gasoline has moved above ฿48.
At the same time, the Oil Fuel Fund is more than ฿83 billion in deficit. Its financial position deteriorated by another ฿2.819 billion within one week. The subsidy bill remains approximately ฿500 million each day.
Thailand therefore enters the final months of 2026 with stronger confidence but rapidly rising costs. The Commerce Ministry forecasts fourth-quarter inflation of 2.70%. The Chamber of Commerce, meanwhile, sees September and October as a pivotal period.
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The two developments are now converging. Government-supported spending has strengthened confidence, while higher energy costs are lifting inflation. SMEs remain short of liquidity, household debt remains high and provincial employment is slowing.
Wednesday’s fuel increase sharpened that economic divide. Motorists immediately faced higher prices, while businesses confronted another increase in operating costs. Meanwhile, the spending programme credited with lifting confidence is approaching its scheduled end.
The next two months will therefore bring those forces together. Consumer confidence enters the period at a six-month high. Inflation enters it after five consecutive monthly increases. Fuel prices are rising, while the Fuel Fund’s deficit continues to deepen.
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