Indonesia’s inflation rate unexpectedly slowed to 5.47 percent year-on-year in May due to lower food prices, official data showed Monday.
Inflation was now back within the government’s 2013 inflation target range of 3.5-5.5 percent, according to the central statistics agency, after slowing from 5.57 percent in April.
Inflation also fell 0.03 percent on a monthly basis, compared with a 0.10 percent decline in April.
It was the second consecutive month that inflation has slowed following the government’s decision to ease import restrictions which had caused prices of staple foods, such as garlic, to skyrocket at the start of the year.
Statistics agency chief Suryamin, who goes by one name, said food prices had fallen due to a “successful price control policy introduced by the government”.
However, economists have cautioned that inflation could rise sharply if the government hikes fuel prices for the first time in more than four years, as it is expected to do soon.
A rise in fuel prices would push up the cost of everyday goods due to the increased expense of transportation.
Indonesia also posted a trade deficit of $1.61 billion in April, after a $100 million surplus the previous month, according to the statistics agency.
The turnaround was caused by an increase in imports and weaker prices for commodities, a major export for Indonesia, official data showed.
“This was the second highest shortfall in the country’s history,” Credit Suisse economist Robert Prior-Wandesforde said.
Indonesian inflation slows to 5.47 percent in May
