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November 10, 2007

INDONESIA : Economy
Indonesia Nov inflation seen subdued

Indonesia's annual inflation in November is likely to be more subdued than the previous month due to an easing in food price pressure, a senior central bank deputy governor said on Friday.

Miranda Goeltom's comments were largely in line with analysts forecasts that food price pressure was likely to ease after the Muslim fasting month of Ramadan which ended in mid-October.

The central bank has, however, cautioned that Indonesia faces a risk of imported inflation from high global oil prices, seen as a key factor behind its decision to hold rates this week.

"If there is no change of government subsidies for domestic fuel ... then November inflation should be more subdued, contained by food prices as well as no administrative price rises," Goeltom told reporters on the sidelines of a seminar in Bali.

Goeltom added that any increase in domestic subsidised fuel prices was unlikely this year.

Consumer prices in October rose 6.88 percent from a year earlier, faster than a 6.80 percent rise forecast by analysts, but slower than September's 6.95 percent rise, which was the fastest this year.

The central bank left its benchmark interest rate, BI rate <BIPG>, at 8.25 percent this week, for the fourth month in a row, wary about the inflationary threat posed by rising global oil prices.

It has, however, said it sees room to cut rates later, arguing it is "very confident" of achieving its 2007 inflation goal of 5-7 percent although higher oil prices could affect its 4-6 percent inflation forecast for 2008.

Courtesy Reuters

More on Indonesia

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