CPI up amid strong demand for chickens
CPI up amid strong demand for chickens
The Jakarta Post, Jakarta
Inflation, measured by the Consumer Price Index (CPI), rose
by 0.57 percent in January compared to the previous month due to
higher prices of basic food commodities including chicken and
eggs, the Central Statistics Agency (BPS) reported on Tuesday.
BPS chief Sudarti Surbakti told a press conference that the
bird flu outbreak had not affected demand for chicken or eggs
during the month.
The government only confirmed the outbreak on Jan. 25 although
signs of the potentially deadly disease had occurred months
earlier.
BPS said that basic food price index increased by 1.42 percent
in January from the previous month.
Other prices that also increased include processed food and
cigarettes, 0.36 percent; clothing, 0.47 percent; housing, 0.42
percent; education, 0.06 percent; transportation and
communications, 0.64 percent, the agency said.
The Chinese New Year celebration in January may have
contributed to the rising prices of basic commodities, it said.
But on an annual basis, inflation measured by the Consumer
Price Index slowed at 4.82 percent in January compared to the
same month last year. The annual inflation rate in December was
5.06 percent.
The country has seen a relatively weak inflationary
environment during the past year, thanks largely to a stronger
rupiah against the U.S. dollar (which makes imported raw
materials cheaper).
This has allowed Bank Indonesia to continue cutting down its
benchmark interest rate, in the hope of triggering banks to also
cut their lending rates, thus making bank loans more affordable
to the corporate sector. The central bank's benchmark interest
rate is currently hovering at an all-time low of 7.86 percent,
compared to more than 13 percent at the beginning of last year.
The government has projected inflation this year to reach 6.5
percent.
The government has received praise from international donors
like the World Bank and the International Monetary Fund for
successfully curbing inflation, following a hyper inflation
problem in the wake of the late 1990s financial crisis. The
benign inflation is a major component of the country's current
stable macroeconomic condition (which also includes a stronger
rupiah and low interest rate environment).
Equally important, the benign inflation would also help
maintain people's purchasing power, which bodes well for efforts
to preserve strong domestic consumption, the country's main
economic growth engine.
However, with the 2004 general election already around the
corner, many have raised doubts the trend would continue as
trillions of rupiah will be used by political parties trying to
garner as many votes as possible.
This would put pressure on inflation on the supply side as
there would a significant increase in money in circulation.
Elsewhere, BPS also said that it has used a modified method in
its calculations to measure inflation as of January. It has used
2002, instead of the usual 1996, as the base year in its
inflation calculation.
BPS argued that the change would enable it to find more
accurate data as the current method reflects the fast-changing
socio-economic conditions.
The new report covers data surveys on 744 goods and services
as compared with 600 previously, while boosting the number of
cities in the surveys from 43 to 45.
eye box
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Inflation 2002 2003 2004
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1. January (on-month) 1.99% 0.80% 0.57%
3. January (on-year) 14.42% 8.74% 4.82%
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Source: BPS