Government asked to tighten bolts of inflationary pressures

Government asked to tighten bolts of inflationary pressures

JAKARTA (JP): The chief of the Central Bureau of Statistics is calling on the government to make a stronger commitment to maintaining the inflation rate below 10 percent this year.

Sugito Suwito predicts that inflationary pressures will further mount if no serious efforts are made to curb price increases.

He warned that the inflation rate of 2.47 percent in the January-February period was too high given the government's inflation target of around five percent for 1995.

The government hopes to cut the inflation rate to an average of five percent per annum in the current Sixth Five Year Development Plan (Repelita VI) period. Finance Minister Mar'ie Muhammad, however, told members of the House of Representatives recently that the target is a bit too low due to today's increasing inflationary pressures.

Mar'ie did not specify a realistic target for the inflation rate but said that the government would make a concerted effort to keep the inflation rate at "a single digit".

The annual inflation rate has hovered around 10 percent for the last few years, except in 1992 when the rate was checked at an unusually low of 4.3 percent. Inflation was recorded at 9.53 percent in both 1990 and 1991, at 9.77 percent in 1993 and at 9.24 percent in 1994.

Sugito acknowledged that the government's expectation of keeping the inflation rate below five percent this year was unrealistic.

"The inflation rate has already reached 2.47 percent within two months time, which would mean that the inflation rate could not exceed 2.53 percent for the rest of the year," he pessimistically told the Kompas daily last week.

According to Sugito, a former senior official at the National Development Planning Board, high inflation in the January- February period was primarily caused by the uncontrollable increase in food prices.

He said the rise in food prices would remain the dominant factor influencing inflationary pressure this year, in addition to the slow growth predicted in this year's rice production.

A lower rice supply would also make it more difficult for Bulog, the government's semi-buffer stock agency for strategic consumer products, to stabilize rice prices.(hen)