The rise of prices in some of the nation's key commodities including rice, wheat and soybeans saw on-year inflation pushed to a 16-month high in January, despite efforts by the government to reduce costs by eliminating taxes.

The Central Statistics Agency (BPS) presented its report Friday and said consumer prices in January rose 7.4 percent from a year earlier, against 6.6 percent recorded in December.

Deputy chairman for statistics distribution and services at BPS Ali Rosidi said inflation hit 1.77 percent in January, rising from 1.1 percent in December.

The report said last month consumers paid 0.74 percent more for staple foodstuffs and 0.34 percent more for processed food, drinks, and cigarettes, as well as 0.49 percent more for fuels and electricity.

Staple food prices which increased the most during the month included rice, which rose 0.27 percent; fish and tempeh, 0.16 percent each; and tofu, 0.13 percent.

The main raw material for tofu and tempeh is soybeans.

Soybeans were the most sought-after staple foodstuff in January following a scarcity in the market, which saw the government eliminate import duty on the commodity.

"However, the price of soybeans will not continue to rise as the government has prepared some measures to help safeguard the price," Ali said.

On Friday, the government announced a cut in income tax from the transaction of soybean import from 2.5 percent to 0.5 percent.

Noodles experienced the highest increase within the processed food and drinks category, at 0.09 percent.

The BPS conducted its survey across 45 national cities, all of which had suffered inflation.

Palangkaraya in Central Kalimantan had the highest inflation rate of 5.02 percent in January, while Manado in North Sulawesi had the lowest at 0.1 percent.

The survey is conducted every month.

Although inflation is usually high in January, as well as during school, Idul Fitri and Christmas holidays, last month's inflation was the highest in the past three years.

Inflation rates in January 2007 and 2006 were 1.04 percent and 1.36 percent, respectively.

The central bank, Bank Indonesia, encouraged the government to stabilize the price of staple foodstuffs if it wanted to maintain the country's full-year inflation at 6 percent, as assumed under the 2008 state budget.

Even after BPS's announcement, BI said it was upbeat about achieving full-year inflation targets.

"I expect inflation for the next 11 months will be lower, capping eventually full-year inflation at 6 percent," BI governor Burhanuddin Abdullah said.

Analystsn said that high inflation rate may discourage Bank Indonesia from cutting its benchmark interest rate.