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Indonesia's October inflation seen accelerating to 3.03 percent year-on-year

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By Reuters
Indonesia's October inflation seen accelerating to 3.03 percent year-on-year
FILE PHOTO: A vegetable seller sits while waiting for customers at the morning market in Jakarta, Indonesia, August 1, 2017. REUTERS/Beawiharta   -   Copyright  BEAWIHARTA(Reuters)

JAKARTA (Reuters) – Indonesia’s annual inflation rate is expected to pick up slightly in October, but to remain within the central bank’s target range, a Reuters poll showed on Tuesday.

The median forecast of 17 analysts in the poll was for the consumer price index to rise 3.03 percent on an annual basis in October, compared with 2.88 percent a month before.

“A rise in non-subsidised fuel prices and a further slide in the IDR likely contributed to the increase,” ANZ said in a note, referring to the Indonesian rupiah’s weakness.

“Nonetheless, the big picture is that inflation remains contained and will not be a major concern for Bank Indonesia (BI),” ANZ said.

BI Governor Perry Warjiyo on Friday estimated an October inflation rate of 3.05 percent, which he said would mean that the end-2018 rate may be slower than the bank’s initial expectation of 3.4 percent.

BI has raised its benchmark interest rate five times since mid-May, by 150 basis points, to support the falling rupiah.

But officials with the central bank had argued repeatedly that the rupiah’s weakness had not affected consumer prices as BI’s survey showed companies preferred to cut profit margin instead of raising prices.

(Polling by Nilufar Rizki and Maikel Jefriando in JAKARTA and Khushboo Mittal in BENGALURU; Writing by Gayatri Suroyo; Editing by Gopakumar Warrier)