Indonesia inflation eases to 7.75 pct in February

Jakarta — Indonesia’s consumer prices grew at slower pace in February, giving room for the central bank to keep its benchmark interest rate unchanged at this month’s meeting.

The consumer prices index eased to 7.75 percent in February on a yearly basis from 8.22 percent in January, Adi Lumaksono, deputy statistic of production of the national statistic bureau announced on Monday.

Hike on foods prices due to disruption on distribution was the main contributors of the acceleration of inflation in February, he said.

“As a common phenomenon, the weather in our country has given its impact on foods supply distribution,” Adi told Xinhua.

Analyst from CIMB Niaga Wisnu Wardana foresaw that the central bank (BI) to persist keeping its basic rate on hold at 7.75 percent at its meeting at the beginning of this month.

“The BI may hold the rate at this month meeting as pressures have flagged. Going forward, maybe the bank will wait and see the pressure from external,” he told Xinhua over phone after the announcement.

The analyst forecast that the Fed’s stimulus reduction may have a small impact on the flow of capitals.

The central bank aggressive tightening policy of rising its basic rate by 1.75 percentage points to 7.50 percent between June to November last year has put Indonesia on course to fare better than other emerging economies battering by capital outflows.

On month, Adi said that inflation eased significantly to 0.26 percent in February after gaining by 1.07 percent in January.

Core inflation, excluding volatile prices for items such as food and government-regulated prices for products including fuel, chalked up higher at 4.57 percent in February from 4.53 percent in January, he said.

Indonesia is scrambling to flag risk of disruption of food supply as the vast-archipelago country would keep witnessing impact of wet season by March as it is foreseen by the meteorology agency.

The Indonesian central bank foresees the inflation accelerate at slower pace this year of 3.5 to 5.5 percent.

The Indonesian economy is projected to grow slower this year at 5.5 percent due to sagging of global economy, finance minister Chatib Basri has said. Since: Xinhua