Indonesia inflation in August reaches 16-month high

Indonesia's inflation rate in August reached the highest level in 16 months due to electricity price hike, but it is still not strong enough to push the central bank to raise interest rate this month as it prefers to keep the momentum of growth.

The Statistic Bureau announced on Wednesday that the inflation was recorded at 6.44 percent in August from 6.22 percent in July.

A senior bureau official Subagio Jiwosumono told a press conference that the electricity price hike by an average of 10 percent in July and the increase in food prices contributed to surged inflation in August.

Indonesian central bank meeting on Sept. 3 seems to refrain from raising the interest rate and keep it at 6.5 percent, CIMB Niaga Bank analyst Winang Budoyo said.

"The central bank seems to keep the momentum of growth and may start to raise the rate in November," he said.

The central bank initially forecast inflation will end at the range of 4 to 6 percent this year, but the bank said Tuesday that it will exceed 6 percent.

On month, the inflation reached at 0.76 percent in August after registering 1.57 percent in July, Subagio said, lower than expectation of analysts.

"It is surprise. It may indicate that the people decrease their consumption or foods supply has been boosted," said Budoyo.

The prolonged wet season has spurred food prices hike, which regularly peak during the Islamic holy month of Ramadhan.

The government forecast economy will grow by 6 percent this year as a result of the rebound of export and investment.

Source:Xinhua