Indonesia inflation seen easing on oil prices, exports to fall

[JAKARTA] Annual inflation in Indonesia likely eased to 7.50 per cent in January from 8.36 per cent in December 2014 after domestic fuel prices fell on sliding global oil prices, a Reuters poll showed.

The median forecast of 15 analysts in the poll was for month-on-month inflation to cool to 0.26 per cent in January from 2.46 per cent in December. One analyst forecast deflation.

Inflation spiked late last year after President Joko Widodo hiked subsidised fuel prices in November. But in January, he managed to cut fuel prices while scrapping subsidies for gasoline due to the fall in global oil prices.

Analysts also penciled in a sharp contraction in Indonesia's exports with the median estimate showing a fall of 16.18 per cent in December from a year earlier. Imports were also expected to fall 9.70 per cent from a year earlier.

Southeast Asia's largest economy was expected to post a US$110 million trade surplus in December, the poll showed.

Bank Indonesia Governor Agus Martowardojo has predicted annual inflation of 7.5 per cent and a modest trade surplus of more than US$100 million.

REUTERS