Double-digit inflation until Oct. 2006: BI<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The central bank is predicting inflation in the country will
\nremain in double digits until next year's third quarter -- at the
\nearliest.<\/p>\n
Bank Indonesia (BI) Governor Burhanuddin Abdullah said
\ninflation would ease down afterwards, returning to single digits
\nas the year wrapped up.<\/p>\n
\"There is an indication that inflation during next year's
\nfourth quarter will slow down to between 7 percent and 8
\npercent,\" he said in a seminar on the economy on Wednesday.<\/p>\n
Burhanuddin did not elaborate further on what would cause the
\neasing down.<\/p>\n
Separately, an optimistic Minister of Finance Jusuf Anwar said
\nthe monthly inflation rate during this year's remaining months of
\nNovember and December would likely be contained at below 1
\npercent month-on-month, although the full-year inflation for 2005
\nwould probably still end up in double-digits.<\/p>\n
\"But at least the worst is now over,\" he said. \"And we will
\ncontinue to improve the situation step by step.\"<\/p>\n
State Minister for National Development Planning Sri Mulyani
\nhad earlier said that the government would work hard to stabilize
\nprices and the rupiah to bring the currently high inflation down
\nby March next year, and try to meet the year's inflation target
\nwithin the remaining three quarters.<\/p>\n
The government was expecting a full-year inflation of 8.6
\npercent for 2006, and 8 percent for this year.<\/p>\n
However, inflation has already skyrocketed to 17.89 percent in
\nOctober, after the government more than doubled the average price
\nof fuel that month.<\/p>\n
The higher-than-expected October inflation had forced the
\ncentral bank to continue raising its benchmark BI Rate as well,
\nto 12.25 percent -- its fifth rate hike since July.<\/p>\n
BI has been raising its key rate to support the rupiah, which
\nhad been slumping as soaring global oil prices bloated the cost
\nof the country's fuel subsidies and hurt confidence in the
\ngovernment.<\/p>\n
Before October inflation was already on the rise, shooting up
\n8.81 percent in March when the government first raised fuel
\nprices by an average of 29 percent. Inflation only eased down for
\ntwo months, before picking up pace again in July.<\/p>\n
The combination of higher inflation and interest rates are
\nbeginning to put pressure on the growth prospects of Indonesia's
\nconsumption-driven economy, as the public's purchasing power
\nweakens and consumer and commercial loans become more expensive.
\nThe consensus among analysts puts the growth at 5.7 percent for
\nthis year, lower than the government's 6 percent target, with
\ninterest rates predicted to stay high until at least next year's
\nsecond quarter.<\/p>\n
Bank Mandiri chief economist Martin Panggabean said the
\nongoing high inflation and interest rates would likely constrain
\ngrowth until later next year.<\/p>\n
Martin saw Indonesia's economy being able to expand only
\nbetween 4 percent and 4.5 percent during this year's final
\nquarter, citing a seasonal slowdown in construction projects.<\/p>\n
For 2006, Martin saw the economy growing by a moderate 5
\npercent.<\/p>\n
\"Indonesia's economy should be better next year, but only if
\ninflation and interest rates decrease within the year's first
\nquarter,\" he said.<\/p>\n
How this would occur depended on the central bank's policies
\nto address the situation, he said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/double-digit-inflation-until-oct-2006-bi-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}