Inflation up to August in this calender year has already reached 7.94 percent. The country's high level of inflation is particularly inflicted by the government's decision to raise prices of subsidized fuels in late June. Indonesia's July inflation accelerated to 3.29 percent, while August inflation was still high at 1.12 percent. Due to the fuel issue, Bank Indonesia's inflation target had to be revised up from the 3.5-5.5 percent range to the 9.0-9.8 percent range for full-year inflation.

An official at Statistics Indonesia (Indonesia's bureau for statistics), however, said that there is a small chance of deflation in September. Despite a sharp decline in prices of peppers and onions, prices of other food products are still high. These products include cooking oil and chicken meat. Moreover, gold jewelry prices have increased sharply. Therefore, Statistics Indonesia forecasts low inflation in September unless prices of chicken meat, cooking oil, flour and sugar fall in the last week.

Statistics Indonesia also said that Indonesia's annual inflation rate may stay around 8 to 9 percent up to June 2014 before easing to a normal level.

2013    Inflation
January      1.03%
February      0.75%
March      0.63%
April     -0.10%
May     -0.03%
June      1.03%
July      3.29%
August      1.12%
Total      7.94%
    2008   2009   2010   2011   2012   2013
(annual percent change)
   9.8    4.8    5.1    5.4    4.3    7.9¹

¹ year to date
Source: Statistics Indonesia