Rising inflation in Indonesia

The agency, also known as the BPS, said the final inflation figure was higher than the initial prediction of 5.9 percent, but still lower than the national figure of 6.96 percent.

Agus Suherman, head of the agency's Jakarta office, said the three commodities largely responsible for contributing to the inflation last month were rice, gold and chili peppers.

Chili peppers in particular have risen almost daily in price over the past few weeks, from Rp 75,000 ($8.30) a kilogram in mid-December to more than Rp 100,000 a kilogram now.

"Given this ongoing rise in pepper prices, we can certainly expect inflation to keep rising through the early part of this year," he said.

"Last year's annual inflation rate was influenced mostly by factors like the increase in the base electricity rate and vehicle registration fee back in July, as well as the commodity price increases toward the end of the year," he added.

Reynalda Madjid, head of the Jakarta Cooperatives and Small and Medium Enterprises Agency, blamed the skyrocketing price of chili peppers and rice on failed harvests in producing areas elsewhere in the country, caused largely by inordinately heavy rains.

He said the rains had also hampered the distribution of produce to Jakarta markets from outside the capital, which led to a scarcity of the commodities and forced their price up.

"To address this problem, we're trying to speed up the distribution of peppers and rice directly to the markets," Reynalda said.

He added his office would also set up temporary markets where particularly sought-after produce could be purchased at a subsidized price.

He said these "cheap markets" would be set up in slum areas in the capital as well as other low-income neighborhoods.

"The point of this exercise is not just to counter the rising price of food commodities, but also to ease the burden on the people who are most hard-pressed to afford items such as chili peppers and rice," he said.

He added his agency had set up 17 such markets throughout 2010, each one in a different area.

Each market offers 1,500 packets of essential goods for between Rp 15,000 and Rp 20,000 each, less than the Rp 25,000 to Rp 30,000 that the same items would fetch at a regular market.