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Indonesia seen facing inflationary spiral

Indonesia could get caught in an inflationary spiral as rising global oil prices and falling gasoline subsidies at home combine with rising wages, said Sofjan Wanandi, chairman of one of the country’s most influential business organisations.

Local governments raised minimum wages in key industrial zones near Jakarta by as much as 36 percent last month. Similar increases could spread to other parts of the country, said Wanandi, who heads the Employers’ Association of Indonesia – one of Indonesia’s largest business associations, which includes many of the country’s biggest companies – as other local governments consider doing the same to win votes in upcoming elections.

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