(Xinhua)
Updated: 2008-05-07 20:31

JAKARTA  -- The Indonesian Central Bank, the Bank of Indonesia, predicted that the country's inflationary rate this year could exceed 9 percent, higher than the earlier target of 5 plus minus 1 percent, Deputy senior of the bank Miranda Goeltom said here Wednesday.

The senior bank official told reporters that the figure was driven by the hikes of oil prices.

The government planned to increase oil price less than 30 percent to avoid hefty subsidizes following the soaring global oil prices which nearly reach 120 US dollar per barrel. The country has increased subsidies on oil sector from 45.8 trillion rupiah ( some 5.33 billion US dollars) to 126.8 trillion rupiah (about 13.85 billion US dollars).

"For this year, (the inflation) can be more than 9 percent," said Goeltom.

"The trend has indicated to more than 9 percent,"she said.

The government has revised up inflation target from 6.0 percent to 6.5 percent.

People's affordability has weakened since the food crisis in Indonesia recently.

The bank official said that the bank would take measures to maintain the people purchasing power amid the high inflation rate.

"So, its impact on the economic growth can be reduced,"she said.

To maintain the affordability and social impact, the government will provide cash incentives to low income family.

Indonesia's cumulative inflation by April reaches 4.01 percent and year on year inflation in the month (April 2008 to April 2007) is 8.96 percent, according to the National Statistic Bureau.

The biggest Southeast Asia economy, Indonesia, has reduced its economic growth target from 6.8 percent to 6.4 percent this year due to the global crisis on commodities and oil.

The country rose fuel prices more than double in October 2005 followed by providing incentive of 100,000 rupiah (about 10.98 US dollars) per month to the low income group. The policy then resulted in a high inflation.