Customer shops at traditional market. Wet markets and traditional grocery shops are holding on to customers in rural areas and small towns, but they are losing ground in larger towns and cities. (Photo: The Insider Stories)

JAKARTA (TheInsiderStories) – Indonesia’s inflation accelerated slightly in March from a month before, driven by an increase in raw food prices and transportation costs, the country’s Central Statistics Agency reported on Monday (02/04).

The headline consumer price index (CPI) in March increased 3.40 percent from a year ago. That compared to a 3.18 percent annual increase in February.

Suharyanto, the head of the statistics agency said base on the CPI’s weighting calculation, the biggest push for March inflation was from foods and transportation costs.

He was referring to the statistics agency’s data, which shows an index that measures raw foods, which has a weighting of 18.9 percent in the CPI calculation, increased by 4.24 percent in March from the corresponding period last year.

That compares to a 3.40 percent increase in February

Meanwhile, an index that measures transportation costs (which has a weighting of 19.1 percent in the CPI) rose 1.83 percent year-on-year in March. This represents an acceleration from a 1.41 percent increase in the previous month.

“The impacts of the rise of the price of Pertamax (RON 92 gasoline), which went up Rp 300 per liter at the end of February, was still felt in March 2018. That coupled with the Rp 200 per liter increase in Pertalite (RON 90 gasoline) in mid-March,” Suhariyanto told reporters on Monday.

Meanwhile, annual core inflation, which strips out government-controlled and volatile food prices, rose 2.66 percent in March, accelerating from a 2.58 percent annual increase a month earlier.

On a monthly basis, the CPI rose 0.20 percent.

Indonesia’s central bank estimated inflation to remain within its target this year, at 2.5-4.5 percent. In the last policy rate meeting, it decided to keep its benchmark policy rate at 4.25 percent, taking into account of tame inflation figure.

Most economists projected inflation to stay low this year as they see limited factors that could spike inflation.

An economist with Bank DBS Gundy Cahyadi projected inflation to hit 4.0 percent and 4.5 per cent in 2018 and 2019, respectively.