Indonesia's annual inflation in March accelerated at the faster pace in March before the government my use its conditional right to increase oil price, giving more rooms to the central bank to keep the interest rate steady at its meeting earlier this month.

Head of the Statistic Bureau Suryamin told a press conference that inflation reached 3.97 percent in March year on year after accelerating at 3.56 percent in February year on year due to rising gold prices.

Analyst from Standard Chartered bank Fauzi Ichsan said that the condition could lead the central bank keep its basic rate steady at 5.75 percent on its monthly meeting the beginning of this month.

"The central bank may keep interest rate unchanged at its meeting this month, because the inflation has started to increase, " he told Xinhua by phone on Monday.

The central bank has kept it basic rate at its meeting on March 8, after cutting it by 75 basis points at the end of last year and 25 basis points at the beginning of this year.

The central bank governor Darmin Nasution has said that the bank would prefer to use its out of interest rate instrument to absorb excess liquidity, including rising banks' reserve and boosting market operation.

On monthly basis, the consumer price index rose by 0.07 percent in March from that of 0.05 percent in the previous month, said Suryamin.

Annual core inflation that exclude volatile food and energy prices reached at 4.25 percent in March, lower than 4.31 percent in February, he said.

The parliament on Saturday gave the government a right to increase oil price should the average of Indonesian crude oil price in the past six months be more than 15 percent and the government then aborted its plan to increase oil price by one third to 6,000 rupiah (some 0.66 U.S. dollar) per litter on April 1.

The delay of the oil price hiking may boost the country's oil subsidy that widen budget deficit more than the initial target of 1.5 percent.

The parliament has agreed on the government inflation target revision from 5.3 percent to 6.8 percent this year, economic growth target of 6.5 percent in 2012 from the initial target of 6. 7 percent and exchange rate of 9,000 rupiah per one U.S. dollar and crude oil sales at 930,000 barrels per day, Finance Minister Agus Martowardojo has said.

Indonesia has struggled to trim huge energy subsidy to maintain two of its credit rating upgrades to investment grade recently by Fitch's rating agency on Dec. 15 and Moody's Investor Service on Jan. 18.

Indonesian President Susilo Bambang Yudhoyono has aimed to reach an average of annual economic growth by 6.6 percent at the end of his tenure by 2014 through building massive infrastructure which he expect two third of total funds needed at 140 billion U.S. dollar from investors.