Bank Indonesia sees inflation easing in July after hitting peak in June -- by Roffie Kurniawan --
JAKARTA (Thomson Financial) - Indonesia's consumer inflation is expected to start easing in July after having reached its peak in June, Bank Indonesia governor Budiono said on Wednesday. "Our preliminary reading with regard to July inflation is that we may be heading down," said Budiono. "The peak has been reached, hopefully." Indonesia's annual inflation rate in June accelerated to its fastest pace since September 2006, driven by higher transportation costs after the government hiked subsidised fuel prices by an average of 28.7 percent in May. The consumer price index (CPI) in the month was up 2.46 percent from May and was up 11.03 percent from a year ago. In May, CPI rose 1.41 percent from April and was up 10.38 percent from a year ago Budiono said the central bank expects inflation to rise to 10.2 percent at year-end but the pace should ease to between 6.5 and 7.5 percent next year. "It is very achievable given the situation of our food (rice) supply as well as concerted efforts to synchronize monetary and fiscal policy," the BI governor said. "Indonesia has been quite fortunate this year as the price of rice, the main staple food in Indonesia, has been relatively stable due to an extremely good harvest," he said. Budiono said the central bank's focus over the next 18 months will be on guiding down inflation. "The central bank's monetary policy over the next one-and-a-half years will be geared solely toward achieving single-digit inflation in 2009 and beyond. We will simultaneously deploy all available instruments in more flexible way to achieve this," Budiono said. The spike of inflatio
