Inflation up 0.55%, higher rate forecast<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Prices in October rose by 0.55 percent from the previous
\nmonth, bringing the inflation rate during the first ten months of
\nthe year to a modest 3.05 percent, the Central Statistics Agency
\n(BPS) reported on Monday.<\/p>\n
"The (inflation) rise probably had a lot to do with the rise
\nin all basic food prices, mostly due to higher demand ahead of
\nthe fasting month of Ramadhan," BPS deputy chairman Slamet Mukeno
\ntold a press briefing.<\/p>\n
The commodities and services which contributed to the
\ninflation included basic food (1.78 percent); processed food,
\nbeverage and cigarettes (0.03 percent); housing (0.30 percent);
\nclothing (0.25 percent); healthcare products and services (0.30
\npercent); education, recreation and sports (0.13 percent); and
\ntransportation and communications (0.03 percent).<\/p>\n
Slamet added that it was very likely that inflation in the
\ncoming two months would increase significantly because of
\nreligious festivities such as Idul Fitri and Christmas Day.<\/p>\n
"In the previous years, the monthly inflation during those two
\nperiods were above 1 percent," he said. However, Slamet remained
\noptimistic that the rise would not come at a level that could
\njeopardize the government's full-year inflation target of between
\n6 percent to 7 percent.<\/p>\n
On-year inflation -- as measured by the consumer price index
\n(CPI) -- rose by 6.22 percent in October this year as against
\n6.20 percent in the same month last year, BPS added.<\/p>\n
After posting double digit inflation numbers last year,
\nIndonesia has been enjoying a relatively modest rate of inflation
\nthanks in part to a stable rupiah, which has helped prices of
\nimported consumer goods remain stable as well.<\/p>\n
The slight inflation increase should do little damage to the
\npeople's purchasing power, which bodes well for efforts to
\nmaintain a strong domestic consumption, the country's main
\neconomic growth engine.<\/p>\n
The mild inflation should also pave the way for Bank Indonesia
\nto further slash its benchmark interest rate and eventually push
\nbanks to extend cheaper loans to the corporate sector.<\/p>\n
At its latest weekly auction, the central bank cut its
\nbenchmark interest rate to 8.48 percent from 8.53 percent in the
\nprevious week.<\/p>\n
Despite already being the lowest since the 1997-1998 Asian
\nfinancial crisis, economists expect Bank Indonesia to guide rates
\nfurther downward by late December.<\/p>",
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"sponsor": "Okusi Associates",
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