Indonesia said Friday inflation eased to 4.45 percent in May thanks to falling basic food prices during harvest season, as analysts said the central bank's policy of holding interest rates was working.
The consumer price index (CPI) came in at 4.45 percent last month, lower than the 4.5 percent in April, the Central Statistics Agency said.
The cost of chillies, a main ingredient in local dishes, fell about 60 percent while the price of staple rice also came down.
The May CPI fell 0.07 percent on-month compared with a 0.21 percent rise in April.
Core inflation, which excludes volatile food prices, was 4.14 percent year-on-year in May, from 4.24 percent the previous month.
"The central bank will likely maintain the interest rate in its next meeting," said Wilson Sofan, an analyst with Reliance Securities in Jakarta.
Bank Indonesia, the country's central bank, has left its benchmark interest rate unchanged at a record low of 5.75 percent since February.
"This is a clear indication that there is some truth to the authorities' view that inflation pressures remain under control at this stage," said Gundy Cahyadi, an analyst at OCBC Bank.
OCBC forecasts inflation at six percent this year, while the government target remains 5.3 percent. Concerns over inflation have been heightened by a government plan to restrict fuel subsidies.
President Susilo Bambang Yudhoyono said Tuesday the government was looking to restrict the use of subsidised fuel in a bid to shield the state from surging costs after it failed to pass a price hike through parliament in March amid mass protests over inflation.