Consumer prices in Indonesia are increasing more and more than a year

Consumer prices in Indonesia have risen at their fastest pace in a year in May, which could complicate the prospect of the soon-to-be lower interest rates of Southeast Asia's largest economy .

The archipelago's consumer price index rose 3.32 percent in May, its biggest gain since last April, Statistics Indonesia said Monday. Economists polled by Reuters forecast an increase in inflation of 3.17%.

Inflation was fueled by rising prices for food and beverages during the month, which coincided with the holy day of Ramadan for Muslims. This figure does not exceed the inflation target set by the central bank, which is 2.5% to 4.5%.

The Indonesian economy is under pressure this year due to a drop in the country's exports, partly because of the trade war between the United States and China. Indonesia recorded its largest monthly trade deficit in April.

According to badysts, it may be difficult for Bank Sentral Republik Indonesia to follow its regional counterparts in Malaysia and the Philippines and cut interest rates. This is because a more flexible monetary policy could exacerbate the weakness of the local rupiah, down about 6% since November.

"We expect rupiah to weaken over the next few months, as worries over the recent intensification of the trade war and slowing US growth continue to weigh on investor sentiment. . We doubt [the central bank] would soften the policy in these circumstances, "said Gareth Leather, economist at Capital Economics.