New school year to push inflation up<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Inflation in July is expected to accelerate compared to the
\nprevious month due mostly to the start of new school year, a top
\nofficial of the Central Statistics Agency (BPS) said on Tuesday.<\/p>\n
While prices of many basic food commodities were likely to
\nremain stable, inflationary pressure would most probably come
\nfrom hikes in book prices and other education-related items, new
\nBPS chief Choiril Maksum said.<\/p>\n
However, he refused to say as to what level inflation would
\nrise, saying the official figure would be available on Aug. 2.<\/p>\n
Monthly inflation in June was 0.48 percent, as the falling
\nrupiah pushed prices of basic food commodities higher.
\nMeanwhile, on-year inflation during the month (comparing to the
\nsame month last year) stood at 6.83 percent. Annualized inflation
\nin May was 6.47 percent.<\/p>\n
Inflationary pressure has intensified during the past two
\nmonths, creating fears that the government's full-year inflation
\nprediction of 6.5 percent will be surpassed. Some expects
\nforecast inflation for the year to reach around 7 percent.<\/p>\n
During the first semester, inflationary pressure came from
\nvarious sources, including a hike in utility prices, soaring oil
\nprices and the fall of the rupiah against the U.S. dollar.<\/p>\n
The local currency has fallen by double digits so far this
\nyear due to a combination of economic uncertainties at home and
\noverseas, and also political concerns stemming from the July 5
\npresidential election, although it recently rebounded as the
\nelection turned out to be trouble-free and orderly.<\/p>\n
Mild inflation should help maintain people's purchasing power
\n-- a prerequisite to strong domestic consumption, which has
\nbecome the backbone of economic growth during the past couple of
\nyears.<\/p>\n
It will also help ease pressure on the central bank to
\nincrease its benchmark interest rate, particularly amid the rise
\nof the U.S. rate.<\/p>\n
Rising domestic interest rates would otherwise hurt the
\neconomy, as lending would become more expensive.<\/p>",
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