The Indonesian government was optimistic about the inflation rate this year, which it expected to reach between 11 to 12 percent, as a result of oil price hike, Islamic fasting month and Islamic festival, the Media Indonesia reported Wednesday.

"I think inflation this year will reach about 12 percent," Indonesian Coordinating Minister for Economy Aburizal Bakrie said at a press briefing.

The optimism was based on the country's inflation rate until September this year, which was 6.5 percent.

"So the inflation rate will not exceed 12 percent," said Bakrie.

Indonesian State Minister for National Development Planning Sri Mulyani Indrawati said that the oil price hike on average reaching 127 percent on Oct. 1, the fasting month of Ramadhan and the Islamic festival of Idul Fitry would lead to high demand for goods and services that would add pressure on inflation.

Commenting on the Indonesian Central Bank's prediction of 14 percent inflation this year, the minister said that it was the most pessimistic forecast.

Bakrie said that the high inflation this year would lead to the decline of inflation rate next year.

"We predict 12 percent this year and 8 percent next year," he said.

Earlier, governor of the central bank Burhanuddin Abdullah said that financial authority initially predicted inflation of 12 percent, based on the calculation of the predicted-rise of transportation fee after oil price hike this month, but in fact the rise was much higher.

"The rise of transportation should be about 20 percent, but in reality, the hike in many areas on average reaches 55 percent," he said.

Source: Xinhua