REPUBLIKA.CO.ID, JAKARTA -- Indonesia might face possible inflationary pressure in the future despite a drop in the prices of a number of commodities especially energy, a central bank official said here on Friday (2/1).

"In the short term, inflationary pressure from the food sector has been predicted to be quite strong, especially with hostile weather conditions (the country has been facing)," Bank Indonesia executive director of communications department Tirta Segara noted here on Friday.

The risk of inflation has been predicted to arise from the administered price group in line with the current energy subsidy reform, he added.

To deal with it, he stated, Bank Indonesia will strengthen its policy and coordination with the government for controlling inflation at central and regional levels and thus minimize its impact while managing the public inflation expectations.

"With a combination of measures in addition to other steps taken so far, Bank Indonesia believes that inflation can be brought under control and immediately moved to the targeted range of 3 to 5 percent in 2015," he explained.

Tirta pointed out that inflation rose quite high in December 2014 growing beyond BI's prediction.

According to the Central Bureau of Statistics, inflation in December was at 2.46 percent month-to-month or 8.36 percent year-on-year. This was a bit higher than Bank Indonesia's prediction, especially due to higher inflation in the volatile food group caused by some fluctuations in the prices of rice and chilli, which continued until the end of 2014.

However, he observed, inflation in 2014 mostly remained under control in single digits in the midst of high inflationary pressures from the administered price group due to an increase in the price of fuel oils, adjustments in the electricity tariffs of households and industries, the hike of 12-kg container gas and adjustment of air fares.

The maintenance of core inflation has kept inflation in check in 2014 making it slightly better than the inflation in 2013, of 8.36 percent year-on-year.

Core inflation was maintained at 4.93 percent year-on-year amid increasing cost push inflation caused by the increasing administered prices of commodities and food price fluctuations.

"The achievement is inseparable from the policy of Bank Indonesia in managing domestic demand, maintaining the stability of exchange rate, and directing inflation expectations as well as improving policy coordination in controlling inflation between Bank Indonesia and the government," he noted.

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