Costs stayed high despite government efforts to keep them down.
Indonesia's headline inflation jumped to 4.37% in June due to the impact of higher utilities and transport costs, UOB said in a report.
Meanwhile, food inflation has become more restrained after Ramadan, because of government efforts to manage supply and demand of food items.
According to UOB head analyst Ho Woei Chen, inflation risks are likely to be contained for the rest of the year.
The Bank of Indonesia (BI) expects inflation pressure to decrease below previous expectations from weak demand and controllable food price.
"We are maintaining our forecast for the headline CPI to end the year at around 4.4%, within BI’s 3-5% target," Ho said.
BI said GDP growth for 2Q17 will be lower-than-expected because of slower growth in consumption exports. Investment, however, will likely pick up. "We expect exports to sustain a positive growth trend despite the unexpected contraction in June due to base effect from different timings in the Hari Raya holidays compared to 2016.," Ho said said.
Do you know more about this story? Contact us anonymously through this link.