Inflation increases slightly in January<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
The Central Bureau of Statistics (BPS) announced on Monday
\nthat inflation in January rose by 0.8 percent from the previous
\nmonth, lower than many had anticipated.<\/p>\n
BPS chairwoman Soedarti Surbakti said the lower than expected
\nincrease was partly due to a delay in utility price hikes.<\/p>\n
She added that most prices had peaked in December, during the
\nyear-end holiday season.<\/p>\n
\"Before the move (delay in utility price hikes) prices had a
\nstrong tendency to go up, but they gradually came down toward the
\nend of the month,\" Soedarti said during a press conference.<\/p>\n
A manageable inflation rate would provide the central bank
\nmore leeway to continue lowering its benchmark interest rate,
\nwhich would help reduce the burden on the state budget to service
\nthe bonds it issued to bailout the local banking system during
\nthe crisis. A lower interest rate environment should also
\nencourage more bank lending to the business sector.<\/p>\n
Early in January, the government announced almost simultaneous
\nincreases in electricity and telephone rates, and fuel prices, as
\npart of what is said was its commitment to gradually reduce
\ncostly subsidies and help ailing state utilities.<\/p>\n
The increases sparked nationwide protests and several weeks
\nlater the government announced it was delaying the increases.<\/p>\n
Before the delay, analysts had been forecasting inflation of
\nbetween 1 percent and 2 percent for January, which would have
\nposed a serious threat to the government's single digit inflation
\ntarget for the entire year.<\/p>\n
BPS said year-on-year inflation in January was 8.74 percent.
\nThe 2003 state budget targets a 9 percent full-year inflation.<\/p>\n
Soedarti also said the lower-than-expected inflation during
\nthe month was helped because the price of staple goods and
\nservices had peaked in December during the holidays.<\/p>\n
\"Each year, prices traditionally go down after reaching such a
\npeak. This can be seen in the price of basic foods, which fell by
\n1.5 percent during the period, compared with the month before,\"
\nSoedarti said.<\/p>\n
Consequently, the 0.8 percent increase in January's inflation,
\nas measured by the price consumer index (CPI), was mainly driven
\nby a 2.3 percent increase in housing costs, a 1.95 percent rise
\nin the price of processed foods, beverages and cigarettes, and a
\n1.1 percent rise in transportation and telecommunications costs.<\/p>\n
BPS also said clothing prices were up 0.96 percent and health
\ncare costs were 1.05 percent higher, compared to the previous
\nmonth.<\/p>\n
A relatively steady rupiah against the U.S. dollar coupled
\nwith a good harvest also helped moderate price pressure in
\nJanuary.<\/p>",
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