Inflation may be higher than expected: BI<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Inflation this year may be higher than expected due to the
\ncurrent surge in oil prices, Bank Indonesia Governor Burhanuddin
\nAbdullah warned on Monday.<\/p>\n
The rocketing price of oil would drive transportation and
\ndelivery expenses up, requiring extra expenditure for businesses,
\nwhich in turn would push the prices of imported goods up.<\/p>\n
\"The rise in oil prices will hurt imported goods and also have
\nan impact on inflation,\" Burhanuddin said.<\/p>\n
\"We are going to closely monitor external developments --
\nthose which will have an impact on our stability.\"<\/p>\n
Oil prices fell early on Monday from record peaks last Friday,
\nAFP reported. The price of reference light, sweet crude for
\nNovember delivery fell 36 U.S. cents to $52.95 a barrel in
\nelectronic trading on the New York Mercantile Exchange.<\/p>\n
It had touched a peak of $53.40 dollars last Friday, a record
\nin the contract's 21-year history, largely as a result of fears
\nof interrupted supplies from Nigeria.<\/p>\n
In London, Brent North Sea crude oil for delivery in November
\nlost 23 U.S. cents to $49.48 a barrel in opening deals, having
\nhit an all-time summit of $49.75 also on Friday.<\/p>\n
In addition to the impact of the oil hike, a weak rupiah would
\nalso increase pressure on inflation as it would make the cost of
\nimported goods more expensive.<\/p>\n
The local unit has declined by some 7 percent against the
\ndollar since the start of the year, although Bank Indonesia was
\nupbeat it could strengthen to below 9,000 per dollar by the end
\nof the year.<\/p>\n
It was the threat of inflationary pressure that has forced the
\ngovernment and the House of Representatives to revise upward
\nfull-year inflation from 6.5 to 7 percent -- as stated in the
\nrevised 2004 state budget.<\/p>\n
Year-on-year inflation slowed in September at 6.3 percent as
\ncompared with 6.7 percent in August. In July, it rose 7.2
\npercent, the fastest in 15 months, according to Bloomberg data,
\non the back of rising food and fuel costs.<\/p>\n
Rising inflationary pressure increases the pressure on the
\ncentral bank to raise its benchmark promissory notes (SBI)
\ninterest rate, a move that could well hamper economic growth, as
\nbanks loans for economic activities become less affordable.<\/p>\n
In its last auction, the central bank slightly upped the SBI
\nrate to 7.40 percent from 7.39 percent.<\/p>\n
The country would need robust lending, both for businesses
\noperations and consumers, to help achieve the growth target of
\n4.8 percent this year, the highest rate since the crisis.<\/p>\n
Inflation during the January-September period stands at 3.8
\npercent, said the Central Bureau of Statistics (BPS).<\/p>",
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