Indonesia's Oct CPI up 6.88 pct on year

JAKARTA, Nov 1 (Reuters) Indonesia's annual inflation rate eased slightly in October to 6.88 percent as prices of food and clothes fell after the Muslim fasting month of Ramadan, data showed on Thursday.

Analysts, however, were divided over whether the lower inflation in October coupled with a 25 basis point cut in U.S.

interest rates this week would prompt the Indonesian central bank to cut domestic rates amid concerns over soaring global oil prices.

Economists in a Reuters poll had forecast consumer prices would ease to 6.8 percent in October from a year earlier, down from 6.95 percent in September.

Inflation reached its highest level in a year in September because of the increase in food prices ahead of and during the Ramadan celebrations.

But prices have tumbled from double-digit rates since late 2006 after a sharp hike in fuel prices in October 2005 sparked a surge in consumer prices in Southeast Asia's biggest economy.

REUTERS MP DS1423