Indonesia: Inflation remains unchanged in January
February 1, 2011
In January, consumer prices added 0.89% over the previous month. The figure remained broadly unchanged from the 0.92% price rise observed in December and mainly reflected higher food prices. Despite the pronounced price increase, annual inflation remained unchanged at 7.0% in January but came in above market analyst expectations, which had seen inflation at 6.8%. Annual average inflation rose from 5.1% in December to 5.4% in January, continuing the upward trend that began in May 2010. In the face of increasing inflation, the Central Bank raised the benchmark rate by 25 basis points to 6.75% at its most recent meeting on 4 February. The hawkish move took the market by surprise and marked the first interest rate hike since 2008. Monetary authorities explained their decision as ?an anticipatory measure to curb the renewed onset of increased inflation expectations?. The Central Bank set an inflation target of 5.0% 1% for this year and 4.5% 1% for 2012.