Inflation in September reached higher-than-forecast 0.97 percent, with consumer prices pushed up by high demand during the fasting month and ahead of the Idul Fitri holiday, the Central Statistics Agency (BPS) reported Monday.
The 0.97 percent monthly inflation was above the government's expectation of 0.8 percent.
"(The inflation rate in) September was the highest of the past three Ramadan festivals, as the fasting month fell throughout September," said BPS deputy chairman for distribution statistics Ali Rosidi.
Last year, the fasting month started mid-September and ended mid-October. In 2006, it began late September and ended late October.
On a yearly basis, inflation in September rose to 12.14 percent from a year earlier, up from 11.85 percent in August, BPS reported.
Between January and September, inflation reached 10.47 percent.
The government projects inflation will reach 11.4 percent by the end of 2008, while the central bank estimates between 11.5 percent and 12.5 percent.
All 66 cities surveyed by BPS experienced inflation in September, based on the BPS data. Tarakan in East Kalimantan had the highest rate at 2.8 percent while Manado in North Sulawesi had the lowest at 0.03 percent.
Inflation nationwide was mostly contributed by the rising prices of staple foods, housing, water, electricity, gas and fuels. The prices of staple foods rose 1.9 percent, while the prices of housing, water, electricity, gas and fuels rose 1.22 percent.
Ali said inflation would likely decrease in October and November, but probably increase in December as consumer spending rose again for Christmas and the New Year celebrations.
Last year, inflation reached 0.8 percent in September, 0.79 percent in October, 0.18 percent in November and 1.1 percent in December, according to BPS.
Standard Chartered Bank senior economist Fauzi Ichsan said inflation would reach about 12 percent by the end of 2008.
With the high September inflation and the weakening rate of the rupiah against the dollar, Fauzi predicted the central bank would raise "its interest rate by 25 basis points" on Tuesday, bringing the rate to 9.5 percent.
He said a rise in the Bank Indonesia (BI) rate would bring the rupiah closer to Rp 9,500 to the US dollar, which would reduce imported inflation.
"If the rupiah exceeds the level of 9,500 (per dollar), it may quickly snowball to reach 10,000 (per dollar)."
On Monday, the rupiah slipped 1.5 percent to 9,575 per dollar, Bloomberg reported.
BI deputy governor Hartadi A. Sarwono said market players should not panic seeing the decline in the rupiah. "BI will always be in the market."
Aditya Suharmoko, The Jakarta Post, Jakarta
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