my social services are at the recommended level, it is 88.5% of total budget because I am not spending any on my military.
Sorry for not being clear in my post. Those examples of social services I gave were after I stabilize my economy. Point is to keep your social services low until your inflation cools down and then get them somewhere near recommended levels SLOWLY - if you do it too much or too fast it can boost your inflation (be gentle with the changes you might say).
Also, around 12% isn't too much of the inflation and unless that still increases a lot on monthly bases you have nothing to worry. Just give it little time for inflation to stop going up and, after a while, you will notice it go down slowly while your GDP/c still goes up (slowly).
Basically, if you are running a small region you don't want to build too much at once as that makes your inflation shoot through the roof (building consumer, industrial and military factories has most impact).
Of course, I expect tkobo to give more precise and accurate advices as I don’t have nearly as much experience in economics as him even though I like to play small and undeveloped regions.