JAKARTA, July 1 (Reuters) - Indonesia's annual inflation rate eased to 2.51% in June, its lowest level in nine months, to sit near the middle of the central bank's 1.5% to 3.5% target range, official data showed on Monday.
A Reuters poll had expected June's headline inflation to be 2.70%, compared with 2.84% in May.
Core inflation, which strips out government-controlled prices and volatile food prices, was at 1.90% in June, compared to 1.93% in May. Analysts had expected a reading of 1.94%.
Prices of food products contributed to June's inflation, while prices of financial services saw some deflationary pressure, Statistics Indonesia official Imam Machdi told reporters, adding that the inflation rate of volatile components eased.
Inflation has stayed within Bank Indonesia's (BI) target since the middle of last year, but the central bank is monitoring for signs of imported inflation given the weakness of the rupiah against the U.S. dollar.
BI kept its policy rate unchanged in June, but said it would fine-tune other tools to defend the rupiah. Governor Perry Warjiyo said last week he saw no need for further rate hikes at the moment.
Cooling inflation is conducive for policy easing, but BI is expected to keep its focus on maintaining the stability of the rupiah, economists said.
"We retain our baseline view for status quo on rates this year but assign a small probability for hikes if pressure on the currency mounts," Radhika Rao, a DBS economist, said.
Bank Danamon economist Hosianna Situmorang expects headline inflation of 2.9% at the year end and BI to keep its policy rate unchanged at its meeting this month. (Reporting by Stefanno Sulaiman, Fransiska Nangoy; Additional reporting by Ananda Teresia; Editing by Devjyot Ghoshal, Poppy McPherson and Neil Fullick)
