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Indonesia's inflation eases, decreasing pressure to rate hike

06-01-2011 16:18 BJT

JAKARTA, June 1 (Xinhua) -- Indonesia's annual inflation in May grew at a slower pace for the fourth straight month, allowing the central bank to refrain from raising interest rate as it relies much on rupiah appreciation to curb imported inflation.

The statistic agency announced on its website that that the annual inflation reached 5.98 percent after gaining 6.16 percent in April. On month, inflation reached 0.12 percent after a 0.32- percent-deflation in April, the agency said.

The central bank authorities are to meet on June 9. The bank has kept the basic rate at 6.75 percent for the third consecutive months in May as an effort to boost economic growth. The bank rose the rate by 25 basis points on Feb. 4.

"The central bank may still keep interest rate on hold at its meeting this month, and we expect that the bank will start to raise rate next month by 25 basis points," analyst from CIMB Niaga Bank Andry Asmoro told Xinhua by phone on Wednesday.

The increase of jewelry prices (gold) has contributed to the inflation rise, he said. The seasonal factor of back to school in July may raise inflation, Asmoro said.

The statistic agency said that core inflation rose to 4.64 percent in May from 4.62 percent in April.

Indonesian President Susilo Bambang Yudhoyono has targeted an annual economic growth average of 6.6 percent by the reminding of his term at 2014 through infrastructure development.

The central bank has said that the inflation may be less than 5.5 percent this year should the government delay the removal of oil subsidy cut.

Editor:Yang Jie |Source: Xinhua

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