"There will possibly be no inflation but deflation in May albeit small in proportions , namely about 0.1 percent," the BI governor said here on Friday.
He said that because inflation in May last year was 0.29 percent, the year-on-year May inflation rate this month would be 6 percent. "According to what we have observed, it will be around that figure," Darmin said.
The BI governor said that core inflation in May would also drop to below the figure in April which was 4.62 percent.
"The core inflation figure is also low this month. If it is compared with last year`s year-on-year figure it would be at 5.8-5.9 percent," he added.
He said that the low inflation this month could not be taken for granted that BI would not raise its benchmark rate (BI Rate) when it takes a monetary decision next June. This is because a decision making on monetary policy would not merely be based on economic developments in May.
"We would also watch developments in the third quarter. Admittedly, inflation in May is lower due to low prices of necessary commodities, yet we have to watch increases in administered prices such as those of fuel oils. If there would be no administered prices, inflationary pressures would not be heavy," he said. (*)
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Editor: Jafar M Sidik
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