Indonesia's central bank, Bank Indonesia, forecast the country's consumer price index in August to rise at a slower pace than July's 0.93 percent, due to the absence of sentiment that can push prices up, an official of the bank said here on Friday.
The hike of electricity tariff, which has started since May, did not have a significant impact on the overall prices in August, said Juda Agung, executive director of the Department of Economic and Monetary Policies of the central bank.
"The inflation this month will be still below the inflation in July of 0.93 percent. It remains safe," he said at the bank headquarters.
Nevertheless, the director did not elaborate further on the precise figure of the inflation in August.
"The hikes of electricity prices have commenced since May, so its impact in August is not significant," Agung noted.
The national statistic bureau has announced that the consumer price index gained by 0.93 percent in July, higher than the 0.43 percent for June, as demand for foods and transport costs rose during the Ramadan and the Eid al-Fitr Islamic festival, when more than 30 million Indonesians returned their home towns to celebrate the festival.
The central bank was upbeat over the inflation outlook, estimating 4.5 percent to 5.5 percent by year-end, Agus Martowardojo, governor of the bank, has said.
The low inflation in August may allow the central bank to keep its benchmark interest rate steady at 7.5 percent at its upcoming governor board meeting at the beginning of next month
The bank has kept its benchmark interest rate at 7.5 percent since December last year, aiming at guarding Southeast Asia's largest economy against the risk of global economic uncertainty amid efforts to narrow current account gap, Martowardojo has said.
Indonesia's economy is seen to expand by 5.1 percent to 5.5 percent this year, slowing from last year's 5.78 percent.