Indonesia 2012 inflation to plateau to 4.6%

Blame it on the nasty weather condition.

According to CIMB, Indonesia may be more susceptible to higher inflation pressures amid the adverse weather conditions given the pass-through of exchange rate weakness, the fading disinflationary effect of the harvest season and price gains from the approaching back-to-school, Ramadan and Lebaran seasons.

Here's more from CIMB:

However, we believe upside risks are capped, allowing headline inflation to ease to our year-end forecast of 4.6% yoy, for a few reasons: 1) high base effects, particularly from the climb in gold prices in 2H11, 2) although higher agriculture commodity prices – namely corn, soybean and wheat – will raise raw material costs, the domestic supply of major food items like rice and chili remains sufficient to meet demand. In addition, an oversupply has depressed global rice prices, lowering the bill for Indonesia’s rice imports, and 3) minimal price increases are expected in the basket of administered items, which have historically lifted headline inflation significantly when major expenditure items like subsidised fuel and electricity tariffs were lifted.