REPUBLIKA.CO.ID, JAKARTA - Bank Indonesia (BI) predicts that the consumer price index (CPI) in April may be lower than three previous months.  fall 0.04 percent to 0.59 percent in April which is compared to the previous month, 0.63 percent. Index on year to date will stand at 2.39 percent, while year on year (yoy) will reach 5.64 percent.

Deputy Governor of BI, Perry Warjiyo, said the deflation outlook for April was good news for government because it opened door to increase fuel price. "Government has dealt with food supply problems and it is the right time to raise subsidized fuel price," he said on Friday. He expected that deflation would continue untill July 2013. 

Warjiyo said that the deflation in April was caused by the food price dropped slightly. According to the Indonesian central bank, deflation opened door for government to increase the subsidized fuel price. BI has conducted simulation on impact of the fuel price hike to inflation.

"If the government decides to use dual prices by increasing fuel price for private cars only, the inflation will rise to 0.7 percent in 2013," said Warjiyo. 

But if the fuel price hikes in general, then the inflation will depend on the amount of price increase. Warjiyo admitted that the fuel price hike would correlate to inflation and the slower economic growth.

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