What happens to Indonesia inflation if fuel prices rocket by 33%

Your guess is as good as ours.

According to OCBC, Indonesia’s GDP may expand by 6.5% yoy in 2013 from a likely 6.2% yoy in 2012. While overall investment growth should remain strong at around 7-8% yoy and FDI may inch higher from USD21bn in 2012 to USD25bn in 2013, the risk for the firm's growth projection is tied to export growth which may remain somewhat lackluster at about 5-8% yoy.

"We expect inflation to trend upwards towards the 6.2-6.5% range as compared to the official target of 3.5-5.5% if a 33% fuel price hike were to materialize this year. Against this backdrop, we foresee a total of 50bps rate hike to be implemented in the latter half of 2013 when the global economy regains a stronger traction," OCBC noted.