UPDATE 1-Thai Oct CPI up, but rate outlook seen unchanged

* Annual CPI +0.4 pct after 9 mths of deflation

* Annual rise vs +0.6 pct expected and -1.0 pct in Sept

* Change due to higher food/beverage prices, job market

* Oct core CPI -0.1 as expected; rate outlook unchanged

By Apornrath Phoonphongphiphat

BANGKOK, Nov 2 (Reuters) - Thai consumer prices rose 0.4
percent in October from a year before, the first annual rise
since last December, but economists still expect there will be
no increase in official interest rates until some way into
2010.

They said inflation was still benign following nine months
of deflation resulting from a drop in oil prices from record
highs last year, but the authorities would be in no hurry to
tighten policy while the economic recovery was still fragile.

"It's too early to be saying, at this point, that the
economy is strong enough and that we don't need a low interest
rate policy any more," said Charl Kengchon, an economist at
Kasikorn Research Centre.

"The central bank will probably wait until the first half
of next year before it starts thinking about a rate rise."

For the data, click on [ID:nBKK94748]. For a graphic see
here

Most economists say the Bank of Thailand (BOT) is likely to
keep its key policy rate steady at a record low 1.25 percent at
least until the second quarter of next year, when it could
start tightening policy as inflation moves higher.

Vishnu Varathan, an economist at Forecast in Singapore,
said price pressures could pick up quite quickly in 2010, but
the increase in prices was not a worry yet.

"Price pressures are growing at the margin, but the rate of
pick-up is far from alarming, and as such the central bank is
seen to have ample latitude to hold rates at present lows at
the December rate meeting," Varathan said.

The central bank next reviews policy on Dec. 2.

The BOT has left its policy rate unchanged at a record low
1.25 percent since April after cuts totalling 2.50 percentage
points between December and April to help revive the economy.
[ID:nBKK489548].

Like central banks elsewhere in Asia, the BOT has paused in
its aggressive rate-cutting to assess the impact of those cuts
on Southeast Asia's second largest economy, which emerged from
its first recession in 11 years in the second quarter.

Senior Commerce Ministry official Yanyong Puangrach said
living costs had been contained this year despite increased
food prices, which were offset by a drop in oil prices and
government relief measures.

"As inflation is returning to normal, employment is better,
people are more confident about their income and they are
spending more," he told reporters.

Thai consumer confidence rose for a fourth straight month
to its highest in a year in September, helped by the better
economic outlook for 2010. The BOT predicts growth of 3.3-5.3
percent.

Last week, the BOT revised up its 2010 core inflation
forecast slightly to 1.5-2.5 percent from 1.0-2.5 percent, but
kept its headline inflation forecast at 3.5-5.5 percent.

For this year it predicted headline prices would contract
between 0.5 and 1.5 percent, while core prices would be
unchanged to 0.5 percent higher. For BOT forecasts click
[ID:nBKT003120].

In October, core prices, which exclude fresh food and
energy prices, were down 0.1 percent from a year earlier, as
forecast by economists.
($1=33.40 Baht)
(Reporting by Apornrath Phoonphongphiphat, Ploy Tenkate and
Arada Kultawanich; Writing by Orathai Sriring; Editing by Alan
Raybould)