Full-year inflation better than expected: Statistic Agency
Full-year inflation better than expected: Statistic Agency
Dadan Wijaksana, The Jakarta Post, Jakarta
Inflation rose by 0.94 percent in December from the previous
month, bringing the total inflation in 2003 to 5.06 percent, the
lowest year-on-year rate in four years, the Central Statistics
Agency (BPS) reported on Friday.
December's inflation was mainly driven by the hike in prices
of basic foodstuffs as well as processed food and beverages,
mostly because of the Christmas and New Year festivities, BPS
deputy chairman Slamet Mukeno said.
On a monthly basis, basic food prices increased by 2.13
percent, while the prices of processed food and beverages also
experienced a rise of 1.02 percent.
Other commodities also on the rise in the month were housing
(0.28 percent); clothing (1.67 percent); health care (0.35
percent); education, recreation and sports (0.04 percent); and
transportation and communications (0.03 percent), the report
said.
In comparison, inflation in November -- as measured by the
consumer price index (CPI) -- rose by 1.01 and 5.33 percent on
month-on-month and year-on-year basis, respectively.
The rise in December's inflation did not affect the overall
relatively low inflation rate throughout the year.
In fact, the full-year inflation of 5.06 percent was better
than the government's target of 6 percent to 7 percent -- quite
an achievement given that the country had recorded double digit
inflation rates in the past three years.
The government has earned praise from international donor
agencies like the World Bank and the International Monetary Fund
(IMF) for maintaining a sound macroeconomic performance including
a controllable inflation.
Some analysts have partly attributed the fairly modest
inflation to the stronger rupiah, which helped stabilize the
prices of imported consumer goods throughout last year. The local
unit strengthened against the U.S. dollar by about 6 percent
during the year.
Bank Indonesia's benchmark interest rate has been on a decline
in the past two years. Earlier this week, the central bank cut
the rate to 8.31 percent from the already all-time low of 8.41
percent the week before.
The benign inflation is considered good for the economy, as it
would help maintain people's purchasing power, in turn
maintaining strong domestic consumption, the country's main
economic growth engine.
Moreover, the mild inflation should also encourage the central
bank to further slash its benchmark interest rate and eventually
push banks to lower their lending rates for the private sector.