REPUBLIKA.CO.ID, JAKARTA - Indonesian inflation in 2013 could reach nine percent, World Bank predicted in progress report of Indonesia's economic quarterly. The prediction is higher than the basic of macroeconomic assumptions of 7.2 percent in Revised of State Budget 2013. 

"The rising price of fuel oil subsidy will bring massive impact on inflation. It will increase inflation by 1.8 percent from 7.2 percent and peak around nine percent year on year (yoy) by the end of the year," Chief Economist of World Bank, Ndiame Diop said on Tuesday.

Statistics Indonesia announced the consumer price index or inflation was 1.03 percent in June 2013. Thus, the rate of inflation recorded 5.90 percent yoy. World Bank predicted inflation would be stable when entering the middle of 2014. 

World Bank also estimated that the rising fuel price could reduce the current account deficit of 0.2 percent of gross domestic product (GDP) in 2013. In medium term, the impact on Indonesia's external balance would be difficult to measure.

However, World Bank predicted the balance would remain positive generally if government wanted to encourage efficient use of fuel imports and encourage investor confidence in Indonesia's fiscal policies and positions. World Bank projected Indonesian economic growth would be 5.9 percent this year. This figure is lower than 6.2 percent in previous projection. 

Figures of 5.9 percent reflects slowdown in domestic demand growth. In addition, pressures on commodity prices and export revenues are still continue. 

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