Indonesia's inflation accelerated to a 19-month high in April, reducing the central bank's scope to cut interest rates to boost economic growth.
Consumer prices rose 9 per cent from a year earlier, after gaining 8.2 per cent in March, the Central Statistics Bureau said in Jakarta yesterday. Economists expected an 8.7 per cent increase.
Soaring global prices of wheat and soybean have pushed up costs for Indonesian food manufacturers and forced them to charge more for noodles, snack-food and other processed products. The lowest consumer confidence in two years may prevent the central bank from raising borrowing costs to slow inflation.
'Bank Indonesia will say inflation has been cost-pushed' and therefore doesn't warrant an increase in interest rates this month, said Fauzi Ichsan, chief economist at Standard Chartered Plc in Jakarta. 'As long as the rupiah is stable and rising, they can cap imported inflation.' Mr Ichsan forecasts the central bank to raise its benchmark interest rate to 8.5 per cent by year-end from 8 per cent.
PT Indofood Sukses Makmur, the world's biggest instant-noodle maker, increased prices for a fifth time in ten months in March to recover record wheat and palm oil costs.
The government last month cut its 2008 economic growth estimate to 6.4 per cent from its previous forecast of 6.8 per cent. Finance Minister Sri Mulyani Indrawati on April 30 said that the government may cut its growth estimate to 6.3 per cent, matching last year's expansion.
'I'd like to be honest and frank that the problem that we are facing is not light,' President Susilo Bambang Yudhoyono said in a televised speech in Jakarta on April 30. 'Problems relating to our economy are serious.' Indonesia is considering raising fuel prices to reduce the government's burden of capping pump costs for consumers in Asia's third most populous nation.
Consumer prices rose 9 per cent from a year earlier, after gaining 8.2 per cent in March, the Central Statistics Bureau said in Jakarta yesterday. Economists expected an 8.7 per cent increase.
Soaring global prices of wheat and soybean have pushed up costs for Indonesian food manufacturers and forced them to charge more for noodles, snack-food and other processed products. The lowest consumer confidence in two years may prevent the central bank from raising borrowing costs to slow inflation.
'Bank Indonesia will say inflation has been cost-pushed' and therefore doesn't warrant an increase in interest rates this month, said Fauzi Ichsan, chief economist at Standard Chartered Plc in Jakarta. 'As long as the rupiah is stable and rising, they can cap imported inflation.' Mr Ichsan forecasts the central bank to raise its benchmark interest rate to 8.5 per cent by year-end from 8 per cent.
PT Indofood Sukses Makmur, the world's biggest instant-noodle maker, increased prices for a fifth time in ten months in March to recover record wheat and palm oil costs.
The government last month cut its 2008 economic growth estimate to 6.4 per cent from its previous forecast of 6.8 per cent. Finance Minister Sri Mulyani Indrawati on April 30 said that the government may cut its growth estimate to 6.3 per cent, matching last year's expansion.
'I'd like to be honest and frank that the problem that we are facing is not light,' President Susilo Bambang Yudhoyono said in a televised speech in Jakarta on April 30. 'Problems relating to our economy are serious.' Indonesia is considering raising fuel prices to reduce the government's burden of capping pump costs for consumers in Asia's third most populous nation.
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