Bangkok, Nov 27: Thailand's consumer prices in November are seen rising at a modest pace as sluggish demand and seasonally low food prices are expected to offset the effect of the weaker baht, market analysts said on Thursday.

They forecast that the consumer price index (CPI) for November would range from 7.2-to-8.2 per cent year-on-year compared with 7.2 per cent in October.

The commerce ministry will release the November inflation data on Monday.The 11-month moving average for inflation was seen edging up to 5.5-to-5.6 per cent compared with 5.3 per cent in October, they said.

"Sluggish local demand would help curb inflation as it leaves limited room for retailers to pass on costs to consumers," said Irene Cheung, vice president at Merrill Lynch, Singapore.

She forecast the November CPI would rise 8.0 per cent.A sharp fall in domestic demand was partly reflected in the August manufacturing production index, the latest figure available, which contracted at an annual rate of 5.1 for the first time in months.

Arporn Chewakrengkai, chief economist at Deutsche Morgan Grenfrell, said that besides sluggish demand, an unrealistic CPI basket and rising supplies of food on seasonal factors would also tame the inflation.

According to Arporn, rising oil prices, which have jumped around 30 per cent since the baht was allowed to float in July, did not reflect directly in the consumer prices even though people were affected by it.

"The transportation cost reflected in the basket is that of public transportation and taxis, which are controlled... therefore rising oil prices will not push up consumer prices sharply," she said.

"My projection is that November inflation will not exceed 7.2 per cent because the weaker baht effect would be limited by the factors mentioned," she added.

The CPI in October rose 7.2 per cent on the year and 0.8 per cent on the month. Food and beverage prices contracted 0.1 per cent from September.

Many analysts had earlier expected to see the double digit rise in consumer prices in the fourth quarter of this year due to a slide in the baht.

Thailand's new government has adjusted its inflation forecast upward at the end of 1997 to 10 per cent from 9.5 per cent predicted earlier.

Thailand is facing its worst economic downturn in decades and its battered economy is seen growing only 0.6 per cent this year from an earlier forecast of 2.5 per cent.

Kanchit Assavasamran of Vickers Ballas added that there is no new factors in government policy that would affect inflation in a big way.

"There are no new major factors. The increase in value-added tax and other import taxes on luxury goods have already been reflected in goods prices," he said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.