Govt denies manipulating inflation rates<\/p>\n
JAKARTA (JP): The chairman of the Central Bureau of Statistics
\n(BPS), Sugito Suwito, denied yesterday that the government has
\nmanipulated the computation of the country's inflation rates.<\/p>\n
Sugito said here that the existing method for the calculation
\nof inflation rates is too complicated to be manipulated, given
\nthe wide range of goods and services included in the formula.<\/p>\n
The number of goods and services and their respective weights
\nin the inflation computation are based on household consumption
\npatterns, which have been set through an intensive survey on
\ncosts of living, he said.<\/p>\n
"Engineering inflation rates by using only goods with stable
\nprices as the basis for calculating the consumer price index
\n(CPI) would, therefore, be impossible," he told a seminar on the
\nimpact of food price fluctuations on the country's inflation
\nrates.<\/p>\n
He did, however, acknowledge that the existing inflation
\nformula needs updating, to provide more representative inflation
\nfigures.<\/p>\n
The current system for calculating the CPI is based on the
\nprices of 224 consumer goods and services in the capitals of the
\ncountry's 27 province, including Dili in East Timor.<\/p>\n
The government successfully checked the inflation rates below
\n10 percent in the last four years despite sharp increases in the
\nprices of certain products such as cement and other building
\nmaterials during those years.<\/p>\n
Despite this success, the government was often charged of
\nhaving "engineered" the inflation rates, which, according to
\nanalysts, should have been logged at over 10 percent.<\/p>\n
The annual inflation rate was recorded at 9.53 percent in both
\n1990 and 1991, at 4.94 percent in 1992, at 9.77 percent in 1993,
\nat 9.24 percent in 1994 and at 8.64 percent in 1995.<\/p>\n
Sugito said that the rise in foodstuff prices remained the
\ndominant factor for the inflation rate. Last year, for example,
\nthe increase in foodstuff prices contributed 4.37 percentage
\npoints to the inflation rate, as compared to the 1.71 percentage
\npoints contributed by the housing sector, 0.69 percentage points
\nby the clothing sector and the 1.87 percentage points by other
\ngoods and services.<\/p>\n
He said that the increase in the rice price and related
\nproducts alone contributed 0.9 percentage points.<\/p>\n
Chairil A. Rasahan, a member of the Association of
\nAgricultural Experts (Perhepi), also questioned the validity of
\nthe current system of inflation rate computation.<\/p>\n
Speaking at the seminar, held by Perhepi and the Jakarta
\nbranch of the Association of Indonesian Economists (ISE), Chairil
\nsaid that the existing computation system does not really
\naccommodate the true changes in the prices of goods and services.<\/p>\n
He acknowledged that the computation system covered most
\nimportant household consumption items but pointed out that
\nservices used by the government are not included.<\/p>\n
Chief of the National Logistics Agency, Beddu Amang, also said
\nyesterday that the present system of computation has yet to
\ninclude the changes of prices in the monetary sector.<\/p>\n
Sugito said BPS plans to expand the number of goods and
\nservices used in determining the CPI to between 300 and 400 items
\nin order to ensure a more representative inflation figure.<\/p>\n
Sri Mulyani, a lecturer at the University of Indonesia, said
\nat the seminar that the country's inflation was caused by both
\ndemand and supply factors.<\/p>\n
"The impact of the supply factor is, however, much stronger
\nthan the demand side," said Sri, who is also a researcher at the
\nresearch institute run by the Economics School of the University
\nof Indonesia.<\/p>\n
According to one study from the research institute, cost-push
\nfactors accounted for 68.4 percent of overall inflation, while
\nthe remaining 31.6 percent were due to demand-pull factors. (hen)<\/p>\n
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