Indonesia’s Inflation Accelerates to Seven-Month High of 4.5%

Indonesia’s inflation accelerated to a seven-month high in April, rising above 4 percent and putting pressure on the central bank to hold off on further cuts in interest rates.

Consumer prices rose 4.5 percent last month from a year earlier, the Central Bureau of Statistics said in Jakarta today. That compares with a 3.97 percent increase reported in March. The median of 17 forecasts in a Bloomberg News survey was for a 4.46 percent gain.

Indonesia’s central bank left its benchmark rate unchanged at 5.75 percent for a second month in April after cutting the rate in February. Inflation risks have persisted even after the government was forced to postpone an increase in subsidized fuel prices, as President Susilo Bambang Yudhoyono’s administration now plans to limit the sale of subsidized fuel for certain vehicles to cap energy costs and contain the budget deficit.

Bank Indonesia is fighting against inflationary expectations,” Anton Gunawan, an economist at PT Bank Danamon Indonesia, said in Jakarta before the report. “As long as there’s no certainty in the subsidized fuel policy, inflationary pressure will remain.”

The nation’s currency was little changed 9,182 per dollar as of 11:08 a.m. in Jakarta, according to prices compiled by local banks.

Consumer prices climbed 0.21 percent in April from the previous month, today’s report showed. Core inflation was 4.24 percent, compared with a previously reported 4.25 percent pace in March.

Exports rose 5.5 percent in March from a year earlier, the statistics agency said, after gaining 8.5 percent in February. Imports rose 13.4 percent from a year earlier.

Inflation in April was held up by higher prices of food such as chili, onions and sugar because of declining supplies, according to the statistics bureau.

To contact the reporter on this story: Novrida Manurung in Jakarta at nmanurung@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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