June 29, 2018 / 4:23 AM / 3 months ago

Indonesia's June inflation seen slowing to 2.88 percent: Reuters poll

JAKARTA (Reuters) - Indonesia’s annual inflation rate in June is seen slowing from a month earlier, despite Ramadan that traditionally pushes up food and transportation prices, a Reuters poll showed.

A sales woman waits for customers in the outdoor market area of Tanah Abang traditional market ahead of the upcoming Eid al-Fitr holiday marking the end of the Muslim holy month of Ramadan in Jakarta, Indonesia June 12, 2018. REUTERS/Darren Whiteside

The annual consumer price index (CPI) was forecast to rise 2.88 percent, according to the median forecast of 12 economists polled by Reuters. That compared with a 3.23 percent inflation rate in May.

The central bank targets a headline inflation rate of 2.5 percent to 4.5 percent in 2018.

A late rice harvest and the government’s decision to increase rice imports helped contain inflation last month, according to Damhuri Nasution, an economist with PT Danareksa.

Ramadan started mid-May and millions of Indonesians celebrated the end of the Islamic fasting month on June 15. Consumers usually spend more on food, clothing and travel during the period.

Bank Indonesia (BI) raised its benchmark interest rate twice in May, and is expected to hike once more later on Friday, to boost the fragile rupiah and contain capital outflows.

The rupiah IDR=ID fell through 14,400 per dollar on Friday amid escalating global trade tensions, expectation of further Fed rate hikes and rising oil prices.

The annual core inflation rate, which excludes government-controlled and volatile food prices, is seen at 2.78 percent in June, compared to 2.75 percent in May, according to a median of six analysts.

Reporting by Nilufar Rizki and Tabita Diela; Writing by Fransiska Nangoy; Editing by Subhranshu Sahu

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