JAKARTA: Indonesia’s annual inflation rate has quickened to 3.08% in May from 2.42% the previous month.
Data showed yesterday that it lifted closer to the top end of the central bank’s target range by rising prices of food and transport. The figure was slightly higher than economists’ median forecast of 2.97% in a Reuters poll.
Bank Indonesia targets inflation within a range of 1.5% to 3.5%. Core inflation was 2.59% in May, also slightly higher than the poll forecast of 2.52%.
Bank Indonesia raised interest rates by a bigger-than-expected 50 basis points last month. It was a pre-emptive move to prevent inflation from breaking out of its target range, amid rising global crude oil prices and potential imported inflation from a weakening rupiah.
After the rate hike, the central bank said it expected inflation to stay within target until next year.
But the rupiah has continued to lose value against the dollar. It hit an all-time low of 17,892 rupiah to a US dollar yesterday.
The government has shielded consumers from high global crude prices by increasing its fuel subsidy budget. — Reuters
