Indonesian 2012 price pressures could rise on oil subsidy removal-c. bank

Indonesia could face higher inflationary pressures next year if the government scraps fuel subsidies but the central bank remains confident it can achieve its 2012 inflation target of 4.5 percent give or take 1 percent, the deputy central bank governor said on Thursday.

"Next year, inflation may be a problem because the government may not lift its fuel subsidies this year but do it next year. Next year, the inflationary pressure will be stronger on the economy," Budi Mulya told a briefing organised by Asia House in London.

"We anticipate that inflation expectations will be managed. We are confident that we are prepared for the possible move," he added.

The government has indefinitely delayed a plan to wean private car users off cheap gasoline from the second quarter. But an official from the energy ministry said the government may ban private vehicles from using subsidised fuel after the Islamic festive season of Eid al-Fitr at the end of August.

On Tuesday, the central bank held its benchmark policy rate at 6.75 percent, the fifth consecutive month it has done so, saying inflation is likely to stay under control and implying it may have room to hold rates in coming months. Source: Reuters