Inflation spikes in Indonesia after fuel price hike

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RupiahIndonesia’s consumer price inflation rose to 5.9 per cent in June year-on-year, the highest level sine 2008 and above the government’s 2013 target range of 3.5 to 5.5 per cent, official  data released on July 1 data show.

The government said the increase had been “expected” as the price of different sorts of fuel went up by 33 per cent in average in June after fuel subsidies have been slashed, a decision that has sparked angry protests across the country.

However, the fuel price hike only came into effect on June 22, meaning that its full effect is not yet reflected in the higher inflation, analysts remarked. Inflation will likely accelerate to above 7 per cent or even close to 8 per cent in coming months, they say.

Economists now expect the central bank to raise its key interest rate again after hiking it 25 basis points to 6.00 per cent n June.

Indonesia’s core inflation, which excludes volatile prices and prices of items covered by price controls, rose 3.98 per cent in June from a year earlier, relatively stable from 3.99 per cent in May.

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Reading Time: 1 minute

Indonesia’s consumer price inflation rose to 5.9 per cent in June year-on-year, the highest level sine 2008 and above the government’s 2013 target range of 3.5 to 5.5 per cent, official  data released on July 1 data show.

Reading Time: 1 minute

RupiahIndonesia’s consumer price inflation rose to 5.9 per cent in June year-on-year, the highest level sine 2008 and above the government’s 2013 target range of 3.5 to 5.5 per cent, official  data released on July 1 data show.

The government said the increase had been “expected” as the price of different sorts of fuel went up by 33 per cent in average in June after fuel subsidies have been slashed, a decision that has sparked angry protests across the country.

However, the fuel price hike only came into effect on June 22, meaning that its full effect is not yet reflected in the higher inflation, analysts remarked. Inflation will likely accelerate to above 7 per cent or even close to 8 per cent in coming months, they say.

Economists now expect the central bank to raise its key interest rate again after hiking it 25 basis points to 6.00 per cent n June.

Indonesia’s core inflation, which excludes volatile prices and prices of items covered by price controls, rose 3.98 per cent in June from a year earlier, relatively stable from 3.99 per cent in May.

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