Bank Indonesia (BI) expects the consumer price index (CPI) to fall by around 0.13 percent in the course of February due to decreasing food prices. Meanwhile, year-on-year inflation is predicted to sit at 4.38 percent.

BI executive director Juda Agung said that according to the latest survey conducted by the central bank, the expected monthly deflation in February was driven by lower prices of staple commodities.

"Several goods that recorded steeply rising prices in January have [become cheaper] in February. The decline in electricity prices has also taken effect. If rice stocks are under control, March inflation will hopefully be benign as well," he said in Jakarta on Friday.

Juda explained that February usually saw relatively low inflation due to seasonal factors. Assuming that there were no policies affecting public goods such, as fuel price changes, the first quarter of the year would typically score relatively low inflation.

Despite the late rice-planting season from March to April, he assumed that inflation could be maintained at moderate levels, as long as rice stocks were under control. "So, we must be concerned about the stock issue," Juda said.

He further explained that the central bank projected full-year inflation to fall to 4 percent in 2016, driven by the plunge in oil prices to US$37 per barrel. The fuel price adjustment would help keep inflation at a low level.

"If fuel prices are adjusted or if there is an adjustment in transportation tariffs, core inflation and volatile food inflation will surely be affected," he explained, adding that the new estimate was lower than the 4.7 percent inflation assumption in the 2016 state budget. (ags)

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