UPDATE 1-Thai Jan inflation eases from one-year high, rates seen on hold

(Adds detail, comments)

* Jan headline CPI +3.39 pct y/y; +3.40 pct in Reuters poll

* Jan core CPI +1.59 pct y/y vs +1.70 pct in poll

* Headline inflation seen at 2.8-3.4 pct this year

* Most economists still see policy rate on hold for now

By Kitiphong Thaichareon and Orathai Sriring

BANGKOK, Feb 1 (Reuters) - Thailand's headline inflation rate in January eased from a more than one-year high in December, showing a big wage rise last month has had only a limited impact so far, which gives the central bank room to keep rates low to support the economy.

Most economists think the central bank may leave its policy rate unchanged at 2.75 percent at its next meeting on Feb. 20, and possibly for some months to come.

Annual inflation in January was 3.39 percent, as forecast and down from December's 3.63 percent -- the highest since November 2011 -- and compared with a median forecast of 3.40 percent in a Reuters poll.

Core inflation -- which strips out prices of fresh food and energy -- was at 1.59 percent in January after 1.78 percent in December. That is well inside the Bank of Thailand's (BOT) core inflation target range of 0.5-3.0 percent, which guides monetary policy.

"Inflation this year should be around last year's level because the global economy and the weather here should not change much. So product prices are likely to remain stable," Vatcharee Vimuktayon, director-general of the Department of Internal Trade, told a briefing.

The ministry forecast headline inflation of 3.3 percent in the first quarter of this year and 2.8-3.4 percent for the whole of 2013. Last year inflation was 3.02 percent.

Inflation has been held down by government price controls and subsidies for some fuel and utilities plus free public transport to bring down living costs.

Food and drink prices in January rose 4.3 percent from a year earlier after a 4.00 percent rise in December.


With inflation tame and global risks high, central banks across Asia are likely to continue seeking to boost economic growth.

Indonesia, Southeast Asia's biggest economy, saw annual inflation of 4.57 percent in January, up from 4.3 percent in December, due to higher prices for food, drinks and tobacco products. But economists say the Bank Indonesia still has room to leave its benchmark rate on hold at its Feb. 12 meeting.

In Thailand, inflation has been contained, although a nationwide daily minimum wage of 300 baht ($10) came into effect on Jan. 1, a rise of an average 26 percent, in addition to a jump of 40 percent in April 2012.

"Still-benign inflation as gauged by both headline and core inflation should support our expectations of a limited pass-through impact from minimum wage hikes on inflation," said economist Usara Wilaipich at Standard Chartered.

She said that should allow the BOT to keep monetary policy easy to ensure growth and she felt a rate cut was likely in the first half of the year.

But Santitarn Sathirathai at Credit Suisse said of the wage increases: "This year the price effect is likely to be much more visible but inflation will not be totally out of control, just enough for the Bank of Thailand to pause from easing further."

The BOT's policy committee left the benchmark rate unchanged at 2.75 percent for a second straight meeting on Jan. 9, taking a more upbeat view on the economic outlook..

On Jan. 18, the central bank raised its economic growth forecast for this year to 4.9 percent from 4.7 percent, citing stronger-than-expected private investment.

It is more optimistic on inflation than many private economists, maintaining its projection for headline inflation this year at 2.8 percent, with core inflation at 1.7 percent, arguing that the impact of the wage rises will be limited.

The median forecast for headline inflation from economists in a quarterly Reuters poll was 3.3 percent. (Additional reporting by Amy Sawitta Lefevre and Pairat Temphairojana; Writing by Orathai Sriring; Editing by Alan Raybould and Jacqueline Wong)