Inflation rate slowed to 7.4% in May: BPS<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
The country's inflation rate slowed for the second consecutive
\nmonth in May, after reaching a two-year high in March following
\nthe government's decision to increase fuel prices, according to
\ndata from the Central Statistics Agency (BPS).<\/p>\n
Reporting on Wednesday the latest statistics from the
\ncountry's consumer price index (CPI), the agency said the prices
\nof goods and services in the country increased by 0.21 percent in
\nMay from their previous level in April. On a year-on-year basis,
\nprices rose by 7.4 percent.<\/p>\n
These figures seem to indicate inflation is back on the leash,
\nafter running loose in March after the government raised domestic
\nfuel prices by an average of 29 percent to cut the fuel subsidy
\nand ease the burden on the state budget.<\/p>\n
Inflation slowed to a monthly rate of 0.34 percent and an on-
\nyear rate of 8.12 percent in April, as compared to a whopping
\n1.99 percent monthly level and 8.81 percent on-year level in
\nMarch.<\/p>\n
The government has set an inflation target of 7 percent for
\nthis year, revising it up from a previous 5.5 percent estimate in
\nthe 2005 state budget.<\/p>\n
During its ongoing talks on the revision with the House of
\nRepresentatives' budget commission, however, the government is
\nlikely to change the inflation target again in accordance with
\nrecent developments.<\/p>\n
Bank Indonesia thinks it is likely inflation will reach 8
\npercent by the end of the year, while the Regional
\nRepresentatives Council has recommended the government set its
\ninflation target at 9 percent.<\/p>\n
BPS head Choiril Maksum said May's inflation rate was mainly
\ndriven by a 0.59 percent increase in health costs, followed by a
\n0.36 percent rise in household expenditures.<\/p>\n
The higher health costs accounted for 0.02 percent of the
\ninflation rate in May, while household expenditures contributed
\n0.11 percent to inflation.<\/p>\n
Health costs rose in particular on higher costs for health
\ncare services, Choiril said, while people were paying more for
\nrent as part of their household expenditures.<\/p>\n
The prices of processed food increased by 0.23 percent and
\ncontributed 0.04 percent to the inflation rate in May, while
\nstaple food prices went up 0.13 percent in May after falling by
\n0.21 percent in April.<\/p>\n
"The prices of staple foods increased again because the
\nharvest has passed," Choiril said, mentioning several areas in
\nWest Java where the price of rice had started to rise.<\/p>\n
Transportation costs, among the areas hardest hit by the fuel
\nprice increase in March, increased by a mere 0.04 percent in May,
\nfrom a 0.62 percent rise in April and a 15.44 percent surge in
\nMarch.<\/p>\n
"As we can see, the inflationary effect of the fuel price hike
\nhas passed," Choiril said.<\/p>\n
Most analysts expect the year-end holidays, particularly Idul
\nFitri, Christmas and New Year's, to again push prices up.<\/p>",
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