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Indonesia inflation hits year-high

world Updated: Jul 01, 2010 12:28 IST
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Indonesia's annual inflation rate jumped to its highest level in a year in June due to rising food prices, the statistics agency said on Thursday.

The Consumer Price Index in June accelerated to 5.05 per cent from a gain of 4.16 per cent in May but analysts said it was unlikely to hasten interest rate rises.

"Inflation was driven by volatile food prices," statistics agency chairman Rusman Heriawan said.

Month-on-month inflation rose to 0.97 per cent from an increase of 0.29 per cent in May.

The stock market dropped 1.1 per cent in intra-day trade as analysts said the figures confirmed that inflation was back.

"The June inflation is quite strong. The share market dropped after the data announcement," Valbury Asia Securities head of research Krishna Dwi Setiawan said.

Standard Chartered economist Eric Sugandi said: "This shows an upside risk for inflation and a wake-up call for the authorities to keep inflation manageable in July-September period".

The government is targeting annual inflation of 5.7 per cent in 2010.