The annual Inflation in Indonesia in January accelerated at slower pace because of high base of comparison in the previous year, the Statistic Bureau and analysts said on Wednesday.

Acting chief of the bureau Suryamin announced that the inflation accelerated at 3.65 percent in January year on year after registering at 3.79 percent in December year on year.

On monthly basis, the consumer prices rose to 0.76 percent in January compared with 0.6 percent in December as food prices rose, said Suryamin.

The rise still allowed the central bank to refrain from cutting its basic rate and keep it on hold at 6.00 percent at its meeting on Feb. 9 on response of higher inflation expectation as the government plans to remove fuel subsidy on April 1, analyst from CIMB Niaga Winang Budoyo said on Wednesday. "The central bank may not cut rate as it aims to maintain the inflation on the target range as the fuel subsidy removal policy is going to add pressure on inflation,"he told Xinhua by phone after the announcement.

The analyst said that the inflation figures were in line with his prediction and forecast the bank was going to keep the rate at 6.00 by year end, despite other analysts had projected the bank would slightly cut rate to shore up the economy from the risk of the global economic weakening.

Core inflation which excludes volatile food prices reached 4.29 percent in January year on year after rose to 4.34 percent in December, said Suryamin.

The government plan to ban private cars from consuming subsidized fuel in main Java island and Bali island may contribute 0.94 percent to the inflation pressure, Central Bank Governor Darmin Nasution has said. The increasing pressure could lead the inflation end to nearly upper limit of the bank target of 5.5 percent, spokesman of the bank Difi A. Djohansyah said on Jan. 17.

The central bank aimed at purchasing long-term government bond to support government bond prices, Nasution said on Jan. 18.

The bank cut the rate by 75 basis points in October and November and had started to pause the reduction since December.

The Southeast Asia's largest economy had credit rating upgrade to investment grade on Jan. 18 from the second rating agency Moody 's Investor Service after similar suit was done by Fitch's rating agency on Dec. 15, allowing funds managers to allocate investment in the country. Some analysts were concerned that the slow infrastructure development inflation on financial assets may lead to asset bubble.

The rising of the credit status had advanced Indonesian bonds, stock market and appreciated rupiah against the U.S. dollar. The global bond and Islamic bonds issuance last month were oversubscribed.

In December, the parliament passed a long-awaited land acquisition bill into law, paving the commencement of infrastructure projects.

Indonesian President Susilo Bambang Yudhoyono has pledged to achieve an annual economic growth target of 6.6 percent by the reminder of his term in 2014 through building massive infrastructure to decline poverty.

President Yudhoyono has said that he insisted to expand spending on infrastructure to spur economic efficiency amid free trades and economic growth.

Chairman of Indonesian Investment Coordinating Board Gita Wirjawan said on Tuesday that he was optimistic that the government could accelerate building infrastructure facilities that they could absorb expected rapid capital inflows which can prevent asset bubble.

The removal of the subsidy aims at partly anticipating further rising global oil price and in normal condition to allocate more funds for infrastructure.

The central bank has supported the government plan by planning to persist loose monetary policy in coming months to protect economic growth from the risk of sovereign debt crisis in the United States and Europe.

The bank has taken a step to boost liquidity among banks by widening bottom rate of inter bank lending facility to 200 basis points from 150 basis point below its benchmark interest rate of 6. 00 on Jan. 18, according to the bank spokesman.

The bank expects the economy to grow by 6.3 percent to 6.7 percent this year after registering a 6.5 percent growth last year.