The Jakarta Stock Exchange composite index closed down 1.271 points at 1,064.953. Volume was 838.75 million shares valued at 883.21 billion rupiah (88.3 million dollars).
The rupiah was at 10,080/10,110 to the dollar in late trade compared to Monday's level of 10,115/10,125. Financial markets will be closed for the Eid-ul-Fitr Islamic holiday starting Wednesday. They will reopen on Wednesday next week.
Inflation stood at 8.7 percent in October compared to the previous month and 17.89 percent year-on-year, the highest increments recorded since 1998, the Central Bureau of Statistics said Tuesday.
The higher-than-expected figure was driven by higher fuel prices and rising consumption during the Ramadan fasting month, it said.
The data prompted the central bank to raise its interest rates by 125 basis points to 12.25 percent. "The market didn't drop much because there weren't many players around," said Equity Development analyst Nugraha Adi, warning that the bank could hike rates again this year because of the negative spread between the interest rate and inflation.
Following the central bank's rate increase, rate-sensitive stocks such as banks fell, although market movers Telkom and Indosat supported the market, he said.
Bank Central Asia dropped 100 rupiah to close at 3,125 and Bank Danamon fell 25 rupiah to finish at 3,900. State-owned Bank Mandiri was flat at 1,320 rupiah on trade of 30.68 million shares.
Telkom rose 50 rupiah to 5,050 and Indosat gained 100 to finish at 4,975, recovering some of the losses it incurred last week after announcing weak third-quarter results.