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Inflation is likely to ease this month as an early rice harvest drives down prices, with deflation a possibility, the Central Statistics Agency said on Wednesday.

Rusman Heriawan, chairman of the agency, also known as the BPS, said annual inflation would slow if rice prices remained low, helped by an earlier-than-usual harvest season.

“ The price of rice has fallen this week,” he said. “There is potential for deflation [in monthly consumer prices].”

The BPS on Monday said annual inflation in February accelerated to 3.81 percent from 3.72 percent in January.

However, month-over-month inflation eased to 0.3 percent in February, down from 0.84 percent in January, bringing year-to-date inflation to 1.14 percent.

Trade Minister Mari Elka Pangestu said the government was optimistic that the rice harvest would lead to consumer prices stabilizing or even falling.

The retail price of medium-grade rice has fallen slightly from Rp 6,350 (69 cents) a kilogram on Feb. 15 to Rp 6,300 on Wednesday, according to Bloomberg data.

Deputy Agriculture Minister Bayu Krisnamurthi told Bloomberg on Wednesday that the rice harvest may cause the price to fall further.

Bayu added that the government was “confident” about meeting its target of increasing unhusked rice production by 3.5 percent this year.

Greater rice production would reduce inflationary pressures in the broader economy, analysts said.

Finance Minister Sri Mulyani Indrawati said on Monday that the government remained optimistic that inflation this year would be lower than its estimate of 5.7 percent.

The prospect of lower inflation increased confidence among analysts that the central bank would maintain its benchmark interest rate at 6.5 percent at its policy meeting today.

“Relatively low inflation over the past two months has strengthened our prediction that Bank Indonesia will keep its benchmark interest rate at 6.5 percent,” said Anton Hendranata, an economist at PT Bank Danamon.