UPDATE 1-Indonesia may raise electricity tariff from July-min

* Govt expects parliament to approve 10 pct price hike

* Most analysts have factored in effect of hike on
inflation
(Updates with details, quotes)

JAKARTA, June 14 (Reuters) - Indonesia's government is
likely to raise electricity prices by an average of 10 percent
from July 1, the mines and energy minister said on Monday, a
move that analysts say will add to inflationary pressure.

The size of the increase and date it becomes effective were
within market expectations, and so the move has been factored
into forecasts by the government and by most analysts for
inflation this year.

"The 10 percent rise is in line with existing regulations,
it will certainly be raised," Darwin Saleh told repoters,
adding he expected a parliamentary commission on Tuesday to
approve the plan to raise prices from July.

Indonesia's annual inflation picked up in May to the
highest level in a year, but remained within the central bank's
2010 target of 4-6 percent.

The central bank has said rates could be on hold for all of
this year if inflation remains within target, in contrast to
many economists who see inflationary pressure leading to a rate
hike by the third quarter. [ID:nJAK412202]

"It would only add around 0.3 percentage points to the
inflation rate," said Bank Danamon economist Anton Gunawan.

"We expect inflation at only around 5.3 percent at year
end, so there is no need for Bank Indonesia to raise rates this
year," Gunawan said.

The government is still studying the tariff increase for
different types of customers, including for households and
companies.

Saleh said earlier this year that Indonesia may scrap
electricity and fuel subsidies by 2014-2015 so that energy
prices reflect market levels, reducing the financial burden on
the state. [ID:nJAK40722]

Saleh said state power firm PT Perusahaan Listrik Negara
(PLN) needed funds to build power plants and an improved
electricity network.

"There are about 18.9 million familiies in Indonesia that
have not got electricity. PLN needs to build power plants for
them," Saleh said.

The subsidy system is seen as an impediment to Indonesia's
achievement of an investment grade credit rating because it
places a huge burden on the state, and limits the government's
freedom in macroeconomic policymaking.
(Reporting by Muklis Ali; Writing by Gde Anugrah Arka; Editing
by Neil Chatterjee)