Indonesia May inflation picks up to 3.08% y/y

JAKARTA: Indonesia’s annual inflation rate quickened to 3.08% in May from 2.42% the previous month, data showed on Tuesday, lifted closer to the top end of the central bank’s target range by rising prices of food and transport.

The figure was slightly higher than economists’ median forecast of 2.97% in a Reuters poll.

Bank Indonesia targets inflation within a range of 1.5% to 3.5%.

Core inflation was 2.59% in May, also slightly higher than the poll forecast of 2.52%.

Bank Indonesia raised interest rates by a bigger-than-expected 50 basis points in May.

It was a pre-emptive move to prevent inflation from breaking out of its target range, amid rising global crude oil prices and potential imported inflation from a weakening rupiah.

After the rate hike, the central bank said it expected inflation to stay within target until 2027.

But the rupiah has continued to lose value against the US dollar.

It hit an all-time low of 17,892 a dollar on Tuesday.

The government has shielded most consumers from the higher global crude prices by increasing its fuel subsidy budget.

The statistics bureau will release April trade data later on Tuesday.