Floods push inflation higher, BPS reveals<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Inflation in February increased 1.5 percent from the previous
\nmonth due to a combination of severe flood problems and the
\ncontinuing effect of fuel price increases in January, the Central
\nBureau of Statistics (BPS) reported on Friday.<\/p>\n
BPS said that, compared to the same month last year, inflation
\nwas 15.13 percent.<\/p>\n
Analysts said that the high inflation level in February only
\nstrengthened their earlier conviction that the government's
\nsingle digit inflation target of 9 percent for this year would
\nnot be attainable.<\/p>\n
Many experts have said that inflation this year is likely to
\nbe between 11 percent and 13 percent.<\/p>\n
Economist Ferry Hartoyo of Vickers Ballas Securities said
\nthat, with the high inflationary pressure, it would be difficult
\nfor Bank Indonesia to maintain its current policy of easing
\ninterest rates.<\/p>\n
Since the beginning of the year, the central bank has tried to
\nreduce its benchmark interest from near 18 percent late last year
\nto around 16.88 percent now.<\/p>\n
The interest rate reduction is crucial to help ease the
\ngovernment's burden in covering the interest of bonds issued to
\nbail out banks.<\/p>\n
The bureau said that the recent floods, which hit several
\nparts of the country, including Jakarta, early last month had
\ndisrupted the supply of basic goods and consumer products,
\njacking up prices.<\/p>\n
BPS said that food prices, which have the highest weighting in
\nthe Consumer Price Index basket, rose 3.11 percent month-on-
\nmonth, while prices of processed food and beverages increased 0.8
\npercent.<\/p>\n
Housing costs rose 1.67 percent, clothing 0.34 percent, health
\ncare 0.59 percent, education and recreation 0.40 percent,
\ntransportation and communications costs were up 1.16 percent.<\/p>\n
BPS said that the increase in fuel prices by an average of 22
\npercent continued to push prices of goods and services higher in
\nFebruary.<\/p>\n
Elsewhere, BPS said that exports in January grew slightly to
\nUS$4 billion from $3.99 billion in December, while imports fell
\nto $1.89 billion from $2 billion.<\/p>\n
Analysts said that, although the trade surplus in January was
\nhigher at $2.11 billion compared to $1.99 billion at the end of
\nlast year, the outlook for the overall trade picture remained
\ngrim amid uncertainty in the global economy, particularly the
\nU.S., one of Indonesia's main export destinations.<\/p>\n
The government has said that this year's economic growth
\ntarget of 4 percent would continue to be driven by domestic
\nconsumption amid expected weak exports and low investment.<\/p>\n
Some, however, are hopeful that the U.S. economy will recover
\nin the second half of this year, which will benefit Indonesia's
\nexports.<\/p>\n
The country's exports are mainly commodities and low-end
\nmanufacturing goods, which have been less affected by the current
\nglobal downturn than exports from other countries in the region,
\nwhich are dominated by high-tech goods.<\/p>",
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"sponsor": "Okusi Associates",
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