Indonesia inflation hits new seven-year high after fuel price hike

JAKARTA: Indonesia’s inflation rate in September accelerated to its highest since October 2015 due to higher transportation costs following a fuel price hike, statistics bureau data shows.

The headline annual inflation rate rose to 5.95% in September, up from 4.69% in August, but came in slightly lower than a 6.00% rate expected in a Reuters poll.

The annual core inflation rate, which excludes government-controlled prices and volatile food prices, picked up pace in September to 3.21%, compared with 3.04% in August and 3.60% forecast by analysts.

“September’s inflation was mostly affected by the rise in fuel prices and inflation in transportation sector,” Margo Yuwono, head of Statistics Indonesia told reporters.

He warned that inflation could heat up further in October as a number of regions have not yet increased their transportation fares.

Indonesia raised subsidised fuel prices by about 30% in early September as the government moved to rein in ballooning subsidy bills.

Bank Indonesia (BI) in its September meeting hiked policy interest rates by 50 basis points (bps) in an effort to control inflation, which it expects will peak at slightly above 6% and core inflation at 4.6% by the year-end, compared to its target range of 2% to 4%. — Reuters

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