Consumer price index fell 0.68 percent in September

JAKARTA (JP): Indonesia's consumer price index continued to decline in September, falling by 0.68 percent thanks in large part to a drop in food prices, the Central Bureau of Statistics (BPS) reported on Friday.

BPS chief Sugito Suwito said September's deflation, the seventh consecutive month of falling prices, sent the annualized inflation level to 1.25 percent.

"The price of several food commodities, including rice, fell quite sharply in September," he said during a media conference.

Sugito said cumulative inflation for the first nine months of the year was 0.02 percent, which is the lowest level of inflation over the past 15 years.

Sugito said inflation for the entire year could end up at 2.5 percent, depending on domestic political developments.

He said riots during the upcoming presidential election could effect the distribution system, causing prices to soar.

The central bank earlier projected inflation for 1999 would be between 5 percent and 7 percent.

Indonesia suffered hyperinflation of more than 77 percent in 1998 as a result of the worsening economic crisis.

BPS said food prices in September, particularly for rice, chili, onions, chicken, eggs and fish, were down by 3.81 percent from their August levels.

It also said health care expenses dropped by 0.44 percent in September.

However, BPS reported that the price of processed foods, beverages, cigarettes and tobacco increased by 0.43 percent for the month.

It added that prices in a number of other areas, including housing, clothing, transportation, communications, education, recreation and sports, also increased in September.

BPS said the highest level of inflation in September was the 1.09 percent experienced in the West Kalimantan capital of Pontianak, while Ambon, the capital of Maluku, saw the largest level of deflation at 3.69 percent.

Sugito said the agency had not been able to retrieve data from the troubled province of East Timor.

"From now on, we'll no longer include East Timor in our calculations," he said.

East Timor opted for independence from Indonesia in the recent referendum on self-determination.

Commenting on the growth of the third quarter gross domestic product (GDP), Sugito said: "We're still calculating it. But if you look at sector development, the agricultural sector has been very positive, as seen by the oversupply of food commodities. Since the agricultural sector plays a dominant role in calculating GDP, I think third quarter GDP growth will be higher than the same period last year."

"I still can't give you a quantitative forecast. We still have to wait and see what will happen with the presidential election, and who will be the new members of the economic team," he said.

In the second quarter of this year, GDP grew by 1.82 percent compared to the same period last year, the first positive year-on-year growth since the economy contracted by 13.68 percent last year.

BPS also reported that exports rose in August by 8.62 percent to US$4.60 billion from $4.23 billion in July.

Sugito said the better export performance was in large part the result of higher oil prices.

Oil and gas exports jumped to $1.02 billion in August from $865.7 million in July as oil prices increased to around $20 per barrel from $17.93 per barrel in July, Sugito said.

But BPS said that total exports during the January to August period fell by 8.18 percent to $30.52 billion compared to the same period in 1998.

BPS reported that non-oil and gas exports in August increased by 6.44 percent to $3.58 billion compared to the same period the previous year.

BPS said imports in August were at $2.01 billion, slightly higher than the $2.0 billion in July.

It added that imports during the January to August period declined by 13.23 percent to $15.56 billion from the same period in 1998.

"I don't know whether imports will be higher in the coming months because it largely depends on the exchange rate of the rupiah to the U.S. dollar," Sugito said.

The rupiah recently tumbled to around 8,400 to the dollar from around 6,500 in July. The fall is largely attributed to the Bank Bali scandal and East Timor.

Sugito said future import performance could depend on the fate of local importers who have vowed to stop importing from Australia in the wake of deteriorating relations between the two countries.

BPS said the import of consumer goods during the January to July period jumped by 24.94 percent to $1.31 billion from the same period last year.

It added that the import of raw materials during the same period declined by 5.69 percent, while the import of capital goods dropped by more than 51 percent.

"This means that there has been no new investment in the economy," Sugito said.

BPS also reported that tourist arrivals to the country fell by 5.96 percent to 356,920 in August from July. (rei)