Inflation may reach double digits<\/p>\n
JAKARTA (JP): The country's inflation rate could break the
\ndouble digit barrier this year if the government does not take
\nextra measures to facilitate the supply of goods and services,
\nchief of the Central Bureau of Statistics, Sugito, warned
\nyesterday.<\/p>\n
Sugito said month-on-month inflation rates were increasing
\nespecially after the outbreak of the currency crisis last July.<\/p>\n
\"I hope there will be an extra effort to curb inflation this
\nmonth because the month-on-month inflation rates for September,
\nOctober and November were already high,\" Sugito said.<\/p>\n
The month-on-month inflation rate was recorded at 1.29 percent
\nfor September and 1.99 percent for October -- the highest monthly
\nincrease in the last 10 years.<\/p>\n
Inflation from January to October this year was already 7.36
\npercent, compared to only 5.35 percent for the same period in
\n1996.<\/p>\n
The month-on-month inflation figure for November was not yet
\navailable, but is expected to be announced during a monthly
\ncabinet meeting tomorrow.<\/p>\n
Sugito said inflation for November was quite high although not
\nas high as the October figure.<\/p>\n
To remain at single digit inflation rates, Sugito said, the
\nmonth-on-month inflation rate for December should be below 1
\npercent.<\/p>\n
\"Based on experience, the month-on-month inflation rate for
\nDecember never reached 1 percent for the last 10 years. The
\nhighest was only 0.79 percent.<\/p>\n
\"So, it is not impossible to press inflation to below 1
\npercent for this month. It only needs an extra effort from
\neverybody in charge, especially those in the food sector,\" Sugito
\nsaid.<\/p>\n
The culprit behind the staggering month-on-month inflation
\nrates for the last three months was increasing food prices, as a
\nresult of the long drought and currency crisis, Sugito said.<\/p>\n
\"Despite the crisis, people would still buy basic staple
\nfoods. Therefore, once the supply was not steady, prices could go
\nup easily,\" Sugito said.<\/p>\n
\"If we seriously take care of the food problem caused by the
\ndrought, I predict inflation will not reach 10 percent,\" he said.<\/p>\n
But if food prices continued to rise this month, especially
\nbecause of the nearing Chinese New Year and Islamic fasting
\nmonth, year-on-year inflation could break the psychological
\nbarrier of 10 percent.<\/p>\n
He suggested that the National Logistics Agency (Bulog)
\nrelease its stocks of rice to halt the current increase of rice
\nprices.<\/p>\n
If its rice stocks were being depleted, Bulog should start
\nimporting the commodity for the sake of the public, he said.<\/p>\n
\"It's up to Bulog because it is the one which knows exactly
\nwhen to release its buffer stocks to the market. My concern is
\nabout the price -- how to stop price increases,\" Sugito said.<\/p>\n
As for non-food products, Sugito said, the government could
\nstill influence the demand side by tightening liquidity.<\/p>\n
\"When people have no money on hand, they delay their
\nconsumption of luxury goods like cars,\" Sugito said.<\/p>\n
He compared the current crisis to a similar one in 1991, when
\nthe country's economy was affected by a long drought and a tight
\nmonetary policy. The crisis did not affect the inflation rate
\nthen, he said.<\/p>\n
During the 1991 drought, the inflation rate in the fourth
\nquarter was 2.01 percent, he said. (rid)<\/p>",
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