Indonesia inflation in Nov up more than expected

Published Mon, Dec 1, 2014 · 09:50 PM
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INDONESIA'S annual inflation rate spiked slightly more than expected in November after fuel prices were hiked, but economists said that the central bank does not need to raise rates again anytime soon. The statistics bureau said on Monday that the annual headline rate was 6.23 per cent, compared with October's 4.83 per cent and above a Reuters poll forecast of 6.06 per cent.

On Nov 17, President Joko Widodo increased fuel prices by more than 30 per cent. Traditionally in Indonesia, hikes spur a chain of price rises because of higher transport costs. Right after fuel prices went up, Bank Indonesia increased its policy rate by 25 basis points to 7.75 per cent. Many expect inflation to be higher in December and January, but November's surge did not spur concern. Inflation is "nothing too worrisome at this juncture", said Gundy Cahyadi of DBS Bank in Singapore, who expects a peak of 7.8 per cent, probably in January. The central bank might raise rates again "but there is no strong reason to do that now", he said.

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