"The World Bank projection for 2011 CPI inflation is 3.6 percent (yoy), certainly with a sustained increase in the price of components that are vulnerable to shocks," World Bank Lead Economist for Indonesia Shubham Chaudhuri said here on Wednesday.
If so, this was the first time for Indonesia to record an average Gross Domestic Product (GDP) growth above the historical value with inflation below five percent by the end of the year since the Asian financial crisis.
The world`s deteriorating outlook is predicted to affect inflation projection through the weakening demand and credit in 2012.
Annual inflation is predicted to rise to 4.9 percent in 2012, because the inflation base is lower from the 2011 fourth quarter, weaker than expected, he said.
Besides, the Bank Indonesia (BI) policy in determining the BI Rate also be a major factor, in terms of policy rate changes affect price expectations and credit conditions.
Harvested rice quality in the beginning of 2012 also determines the inflation estimation and some of it is supported by the early 2012 imports.
"Inflation is expected to increase in 2012 from the current low value, and inflation is predicted to reach 5.6 per cent by the end of 2012 although there are uncertainties in these projections," he said.
Earlier, Deputy Governor of Bank Indonesia Hartadi A Sarwono said a 0.75 percent inflation would occur in December 2011 and causing the 2011 inflation would be 3.95 per cent.
Haradi also said that the inflation pressure will still be controlled in the range of 4.5 per cent with plus-minus 1.0 percent for 2012 and 2013. (*)
Editor: Kunto Wibisono
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