(Adds economist’s comment in fourth paragraph.)
By Aloysius Unditu and Novrida Manurung
April 1 (Bloomberg) — Indonesia’s inflation slowed last month, giving the central bank room to refrain from raising interest rates when it meets next week.
The consumer price index rose 3.43 percent in March from a year earlier, the central statistics agency said in Jakarta today. That compares with the 3.7 percent median estimate of 22 economists in a Bloomberg News survey. The inflation rate was 3.81 percent in February, a report showed last month.
Indonesia’s central bank, which will meet on April 6 to review its policy, has kept borrowing costs unchanged since cutting them to a record low in August to help the economy avoid a recession. It has refrained from following Malaysia, India and Australia in raising interest rates this year even as inflationreturns to the region amid a global recovery.
The country’s inflation “remains below the Bank Indonesia 6.5 percent policy rate,” David Cohen, an economist at Action Economics in Singapore, said before the report. “Along with the firmness in the rupiah, it gives the central bank some leeway for patience before tightening.”
The rupiah rose 0.2 percent to 9,075 a dollar at 11:15 a.m. in Jakarta today. It has climbed 3.5 percent this year, the second-best performer among 10 Asian currencies outside Japan tracked by Bloomberg. The Jakarta Composite index rose 1.7 percent at 11:17 a.m.
The Reserve Bank of India last month increased the benchmark reverse repurchase rate to 3.5 percent from a record-low 3.25 percent, and the repurchase rate to 5 percent from 4.75 percent, saying containing inflation has become “imperative.” Australia and Malaysia also raised borrowing costs in March.
Indonesia’s central bank will probably maintain its benchmark interest rate at 6.5 percent next week, according to 15 of 16 economists in a Bloomberg News survey. One economist expects an increase to 6.75 percent.
“Inflationary pressures have cooled,” said Juniman, an economist at PT Bank Internasional Indonesia in Jakarta who, like many Indonesians, uses one name. The government has no plan to raise fuel prices until at least the beginning of the second half of this year, he said.
Prices in Southeast Asia’s largest economy have remained low partly because harvests in the main rice-producing regions such Java Island have bolstered food supply, according to Aldian Taloputra, an economist at PT Mandiri Sekuritas in Jakarta.
The price of rice, the staple for Indonesia’s 240 million people, fell 3.2 percent to 6,100 rupiah ($0.67) a kilogram on March 30 from the end of February, according to data from PT Food Station Tjipinang Jaya, the country’s biggest market for the grain.
Indonesian consumer prices fell 0.14 percent in March from the previous month after rising 0.3 percent in February.
For Related News and Information:
–With assistance from Cesilia Han in Seoul, Manish Modi in New Delhi and Dan Petrie in Sydney. Editors: Stephanie Phang, Greg Ahlstrand
To contact the reporter on this story:
Aloysius Unditu in Jakarta at +62-21-2355-3028 or
To contact the editor responsible for this story:
Chris Anstey in Tokyo at +813-3201-7533 or