Prices to remain stable in May: BPS<\/p>\n
JAKARTA (JP): Prices of goods and services remained stable in
\nthe first three weeks of May despite election jitters, raising
\nhopes that inflation for the month would be flat.<\/p>\n
Central Bureau of Statistics (BPS) deputy chairman Kusmadi
\nSaleh said on Monday that the stable prices were attributable to
\nvarious factors, particularly sufficient supply and undisturbed
\ndistribution of basic commodities throughout the election
\ncampaigning activities and a stable rupiah.<\/p>\n
\"There has also been no hoarding behavior,\" he told reporters
\nafter a meeting with senior government officials at the National
\nDevelopment Planning Board office.<\/p>\n
\"If this trend continues, inflation in May will be zero. But
\nwe still have another significant week ahead. Prices can suddenly
\nsoar if things go wrong,\" he said.<\/p>\n
Indonesia is to hold a general election on June 7, which will
\nbe the country's first multiparty election after more than 32
\nyears under the authoritarian rule of former president Soeharto.<\/p>\n
Some people had earlier predicted that the campaign period,
\nwhich started on May 19, would be violent, thus disrupting the
\ndistribution of basic commodities and triggering the hoarding of
\nconsumables. This could weaken the rupiah.<\/p>\n
These worries did not materialize during the first three weeks
\nof May.<\/p>\n
Kusmadi pointed out that the rupiah was stable at around Rp
\n8,000 to the U.S. dollar.<\/p>\n
He also said that a sufficient stock of rice from the
\nsuccessful harvest in the March to May season, coupled with the
\nrice import contract, was a significant factor in maintaining a
\nlow inflation level.<\/p>\n
Indonesia managed to record deflation of 0.18 percent and 0.68
\npercent respectively in March and April.<\/p>\n
The government has recently revised its inflation target for
\nthe 1999\/2000 fiscal year from 17 percent to 10 percent,
\nfollowing the improvements in the country's macroeconomic
\npicture.<\/p>\n
Asked if the new inflation target was attainable, Kusmadi
\nsaid: \"I can't really say because anything can happen,
\nparticularly in the political arena between now and November.\"<\/p>\n
The central bank has been allowing domestic interest rates to
\ncontinue to go down during the past couple of months, on the back
\nof a lower inflation forecasts and a stabilizing rupiah.<\/p>\n
Bank Indonesia last week allowed the interest rate of its
\nbenchmark one-month SBI promissory note to decline by more than
\ntwo percentage points, to slightly over 27 percent from 29.99
\npercent.<\/p>\n
BI will arrange a weekly auction of SBI notes on Wednesday.<\/p>\n
The government expects the lower domestic interest rates to be
\nhelpful in efforts to restructure the country's ailing banking
\nsector and rebuild the battered real sector.<\/p>\n
A lower interest rate would also help rebuild confidence in
\nthe economy.<\/p>\n
Domestic interest rates were more than 70 percent in August
\nlast year when the economic crisis heightened. (rei)<\/p>",
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