CPI up amid strong demand for chickens<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Inflation, measured by the Consumer Price Index (CPI), rose
\nby 0.57 percent in January compared to the previous month due to
\nhigher prices of basic food commodities including chicken and
\neggs, the Central Statistics Agency (BPS) reported on Tuesday.<\/p>\n
BPS chief Sudarti Surbakti told a press conference that the
\nbird flu outbreak had not affected demand for chicken or eggs
\nduring the month.<\/p>\n
The government only confirmed the outbreak on Jan. 25 although
\nsigns of the potentially deadly disease had occurred months
\nearlier.<\/p>\n
BPS said that basic food price index increased by 1.42 percent
\nin January from the previous month.<\/p>\n
Other prices that also increased include processed food and
\ncigarettes, 0.36 percent; clothing, 0.47 percent; housing, 0.42
\npercent; education, 0.06 percent; transportation and
\ncommunications, 0.64 percent, the agency said.<\/p>\n
The Chinese New Year celebration in January may have
\ncontributed to the rising prices of basic commodities, it said.<\/p>\n
But on an annual basis, inflation measured by the Consumer
\nPrice Index slowed at 4.82 percent in January compared to the
\nsame month last year. The annual inflation rate in December was
\n5.06 percent.<\/p>\n
The country has seen a relatively weak inflationary
\nenvironment during the past year, thanks largely to a stronger
\nrupiah against the U.S. dollar (which makes imported raw
\nmaterials cheaper).<\/p>\n
This has allowed Bank Indonesia to continue cutting down its
\nbenchmark interest rate, in the hope of triggering banks to also
\ncut their lending rates, thus making bank loans more affordable
\nto the corporate sector. The central bank's benchmark interest
\nrate is currently hovering at an all-time low of 7.86 percent,
\ncompared to more than 13 percent at the beginning of last year.<\/p>\n
The government has projected inflation this year to reach 6.5
\npercent.<\/p>\n
The government has received praise from international donors
\nlike the World Bank and the International Monetary Fund for
\nsuccessfully curbing inflation, following a hyper inflation
\nproblem in the wake of the late 1990s financial crisis. The
\nbenign inflation is a major component of the country's current
\nstable macroeconomic condition (which also includes a stronger
\nrupiah and low interest rate environment).<\/p>\n
Equally important, the benign inflation would also help
\nmaintain people's purchasing power, which bodes well for efforts
\nto preserve strong domestic consumption, the country's main
\neconomic growth engine.<\/p>\n
However, with the 2004 general election already around the
\ncorner, many have raised doubts the trend would continue as
\ntrillions of rupiah will be used by political parties trying to
\ngarner as many votes as possible.<\/p>\n
This would put pressure on inflation on the supply side as
\nthere would a significant increase in money in circulation.<\/p>\n
Elsewhere, BPS also said that it has used a modified method in
\nits calculations to measure inflation as of January. It has used
\n2002, instead of the usual 1996, as the base year in its
\ninflation calculation.<\/p>\n
BPS argued that the change would enable it to find more
\naccurate data as the current method reflects the fast-changing
\nsocio-economic conditions.<\/p>\n
The new report covers data surveys on 744 goods and services
\nas compared with 600 previously, while boosting the number of
\ncities in the surveys from 43 to 45.<\/p>\n
eye box
\n-------------------------------------------------
\nInflation 2002 2003 2004
\n--------------------------------------------------
\n1. January (on-month) 1.99% 0.80% 0.57%
\n3. January (on-year) 14.42% 8.74% 4.82%
\n--------------------------------------------------
\nSource: BPS<\/p>",
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"sponsor": "Okusi Associates",
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