The Consumer Price Index (CPI) is seen rising 3.27% from a year earlier, according to the median forecast of 13 economists polled by Reuters, barely changing from the 3.28% rate in June.

The central bank expected a July inflation rate of 3.23% on-year, Governor Perry Warjiyo said on Friday, reiterating that low inflation gives BI room for more accommodative policy. BI's target range for this year is 2.5%-4.5%.

Soaring chilli prices offset a fall in transportation tariffs and shallots prices, Ryan Kiryanto, chief economist at state lender Bank Negara Indonesia, said. Chilli is a staple ingredient in Indonesian cuisine.

BI cut its benchmark rate by 25 basis points for the first time in nearly two years at a policy meeting earlier this month.

The annual core inflation rate, which excludes government-controlled and volatile food prices, is seen at 3.17% in July, according to a median of six analysts, cooling from 3.25% a month before.