REPUBLIKA.CO.ID, JAKARTA -- Bank Indonesia (BI) sees that government's policy to decreasie the fuel price on January 1, 2015, will lead to stability of inflation. Earlier, government stated that they revoke the subsidy for 88-octane premium fuel so that the price would be based on global oil price. For the current period, the premium fuel price is at 7,600 IDR. 

"The fuel price will be ups and downs every month. There will be no oil price peg in certain periods, which leads to inflation. But the inflation will be more stable," Deputy Governor of BI, Perry Warjiyo, said recently. 

Higher inflation in Indonesia is usually triggered by fuel price adjustment. BI predicts that deflation will occur in January as the new price of fuel is implemented. The cost of transportation and other goods will also decrease. 

"We will calculate the percentage of decreasing. It eases the control of inflation," he said.

Government's policy also boost the recovery of current account deficit. BI believes that the import of gas and oil will be decreased, causing the deficit of oil and gas to be lowered. However, the recovery also depends on how the government push the non-oil and gas export.

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