The increase in Thailand’s M2 money supply from 5 trillion baht in 1997 to 23.02 trillion baht in 2024 indicates a significant expansion of the monetary base, reflecting economic growth, credit creation, and monetary easing over the years. However, this growth also suggests a long-term decline in the baht’s purchasing power. While M2 growth is often linked to inflation, its direct impact depends on how money circulates and whether it fuels productive activity or asset bubbles. Much of this money may have gone into financial markets or real estate rather than consumer goods, leading to asset price inflation rather than a noticeable rise in the Consumer Price Index (CPI).
The government’s reported 2% inflation rate, based on the CPI, may not fully capture the true cost-of-living increases faced by households. CPI measures a limited basket of goods and can exclude significant price changes in assets or services. Additionally, subsidies, price controls, and global economic factors may suppress reported inflation. This mismatch suggests the real inflation rate could be higher than the official figure, raising concerns about the long-term erosion of savings value and the sustainability of economic growth fueled by monetary expansion.
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