Floods push inflation higher, BPS reveals
Floods push inflation higher, BPS reveals
The Jakarta Post, Jakarta
Inflation in February increased 1.5 percent from the previous
month due to a combination of severe flood problems and the
continuing effect of fuel price increases in January, the Central
Bureau of Statistics (BPS) reported on Friday.
BPS said that, compared to the same month last year, inflation
was 15.13 percent.
Analysts said that the high inflation level in February only
strengthened their earlier conviction that the government's
single digit inflation target of 9 percent for this year would
not be attainable.
Many experts have said that inflation this year is likely to
be between 11 percent and 13 percent.
Economist Ferry Hartoyo of Vickers Ballas Securities said
that, with the high inflationary pressure, it would be difficult
for Bank Indonesia to maintain its current policy of easing
interest rates.
Since the beginning of the year, the central bank has tried to
reduce its benchmark interest from near 18 percent late last year
to around 16.88 percent now.
The interest rate reduction is crucial to help ease the
government's burden in covering the interest of bonds issued to
bail out banks.
The bureau said that the recent floods, which hit several
parts of the country, including Jakarta, early last month had
disrupted the supply of basic goods and consumer products,
jacking up prices.
BPS said that food prices, which have the highest weighting in
the Consumer Price Index basket, rose 3.11 percent month-on-
month, while prices of processed food and beverages increased 0.8
percent.
Housing costs rose 1.67 percent, clothing 0.34 percent, health
care 0.59 percent, education and recreation 0.40 percent,
transportation and communications costs were up 1.16 percent.
BPS said that the increase in fuel prices by an average of 22
percent continued to push prices of goods and services higher in
February.
Elsewhere, BPS said that exports in January grew slightly to
US$4 billion from $3.99 billion in December, while imports fell
to $1.89 billion from $2 billion.
Analysts said that, although the trade surplus in January was
higher at $2.11 billion compared to $1.99 billion at the end of
last year, the outlook for the overall trade picture remained
grim amid uncertainty in the global economy, particularly the
U.S., one of Indonesia's main export destinations.
The government has said that this year's economic growth
target of 4 percent would continue to be driven by domestic
consumption amid expected weak exports and low investment.
Some, however, are hopeful that the U.S. economy will recover
in the second half of this year, which will benefit Indonesia's
exports.
The country's exports are mainly commodities and low-end
manufacturing goods, which have been less affected by the current
global downturn than exports from other countries in the region,
which are dominated by high-tech goods.