Govt denies manipulating inflation rates
Govt denies manipulating inflation rates
JAKARTA (JP): The chairman of the Central Bureau of Statistics (BPS), Sugito Suwito, denied yesterday that the government has manipulated the computation of the country's inflation rates.
Sugito said here that the existing method for the calculation of inflation rates is too complicated to be manipulated, given the wide range of goods and services included in the formula.
The number of goods and services and their respective weights in the inflation computation are based on household consumption patterns, which have been set through an intensive survey on costs of living, he said.
"Engineering inflation rates by using only goods with stable prices as the basis for calculating the consumer price index (CPI) would, therefore, be impossible," he told a seminar on the impact of food price fluctuations on the country's inflation rates.
He did, however, acknowledge that the existing inflation formula needs updating, to provide more representative inflation figures.
The current system for calculating the CPI is based on the prices of 224 consumer goods and services in the capitals of the country's 27 province, including Dili in East Timor.
The government successfully checked the inflation rates below 10 percent in the last four years despite sharp increases in the prices of certain products such as cement and other building materials during those years.
Despite this success, the government was often charged of having "engineered" the inflation rates, which, according to analysts, should have been logged at over 10 percent.
The annual inflation rate was recorded at 9.53 percent in both 1990 and 1991, at 4.94 percent in 1992, at 9.77 percent in 1993, at 9.24 percent in 1994 and at 8.64 percent in 1995.
Sugito said that the rise in foodstuff prices remained the dominant factor for the inflation rate. Last year, for example, the increase in foodstuff prices contributed 4.37 percentage points to the inflation rate, as compared to the 1.71 percentage points contributed by the housing sector, 0.69 percentage points by the clothing sector and the 1.87 percentage points by other goods and services.
He said that the increase in the rice price and related products alone contributed 0.9 percentage points.
Chairil A. Rasahan, a member of the Association of Agricultural Experts (Perhepi), also questioned the validity of the current system of inflation rate computation.
Speaking at the seminar, held by Perhepi and the Jakarta branch of the Association of Indonesian Economists (ISE), Chairil said that the existing computation system does not really accommodate the true changes in the prices of goods and services.
He acknowledged that the computation system covered most important household consumption items but pointed out that services used by the government are not included.
Chief of the National Logistics Agency, Beddu Amang, also said yesterday that the present system of computation has yet to include the changes of prices in the monetary sector.
Sugito said BPS plans to expand the number of goods and services used in determining the CPI to between 300 and 400 items in order to ensure a more representative inflation figure.
Sri Mulyani, a lecturer at the University of Indonesia, said at the seminar that the country's inflation was caused by both demand and supply factors.
"The impact of the supply factor is, however, much stronger than the demand side," said Sri, who is also a researcher at the research institute run by the Economics School of the University of Indonesia.
According to one study from the research institute, cost-push factors accounted for 68.4 percent of overall inflation, while the remaining 31.6 percent were due to demand-pull factors. (hen)
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