UPDATE 1-Indonesia fin min sees higher March annual inflation

Published: 18 Mar 2010 21:21:09 PST

JAKARTA, March 19 - Indonesia's annual inflation in March will be higher than in February, Finance Minister Sri Mulyani Indrawati said on Friday, adding that inflation was on an upward trend due to rising commodity prices.

But Indrawati said Indonesia was still likely to meet its 2010 inflation target of 5.7 percent as long as the rupiah <IDR=> currency contained prices.

"Food prices are higher than March last year, so annual inflation can be higher than last month," Indrawati told reporters.

Annual inflation in February rose to 3.81 percent due to higher food prices.

The finance ministry has proposed a 15 percent hike in electricity tariffs by July this year as well as increased spending on subsidies by almost a quarter. [ID:nJAK510408]

"The inflation target this year should be maintained if the rupiah can contain prices and monetary policy remains appropriate," Indrawati said.

The central bank has kept its benchmark policy rate <BIPG> at a record-low of 6.5 percent and has pledged to keep it the current level as long as inflation remain between 4-6 percent.

The rupiah has gained more than 3 percent against the dollar so far this year and was quoted on Friday at 9,125 to the U.S. currency.

The finance ministry has estimated the rupiah would average 9,500 per dollar this year.