High food prices cause inflation to remain high

JAKARTA (JP): The high prices of food caused the consumer price index to remain high last month, bringing the country's inflation to 6.85 percent in the first eight months of this year, Minister of Information Harmoko said.

The minister told reporters that the .89 percent inflation in August was caused mainly by the increase of food prices by an average of 1.46 percent at the capitals of the country's 27 provinces. He made the announcement following a cabinet meeting on economy at the Bina Graha presidential office here yesterday.

The price of medium-class rice also increased last month by 5.23 percent to Rp 723.93 (33.3 U.S. cents) per kilogram from the previous month's level, he said.

August's food price increase, however, was lower than the 1.57 percent hike in July, he added.

Harmoko said housing prices rose 0.6 percent in August (as compared to 1.42 percent in July), clothing prices 0.02 percent (0.42 percent) and other goods and services 0.82 percent (1.23 percent).

He said President Soeharto, who presided over the meeting, expressed concern over the high rate of inflation and ordered all related officials to take necessary measures to curb further increase in the coming months.

"All government institutions, particularly those related to food supply and distribution, should cooperate with each other to curb price increases so inflation will not reach 10 percent this year," Harmoko quoted Soeharto as saying.

Inflation was high earlier this year due to floods in the first few months and severe drought in the following months.

Harmoko said that the cabinet meeting also reported an 8.7 percent increase in the money supply to Rp 40.26 trillion (US$18.5 billion) as of the end of July from Rp 37.03 trillion as of the end of last year.

Exports

He said that Indonesia gained foreign exchange revenues of $3.55 billion from its exports in June, bringing its total export revenue to $18.39 billion in the first semester of this year.

The June exports were comprised of $2.72 billion in non-oil exports and $835.4 million in oil and gas exports.

Because Indonesia's imports reached $2.72 billion in June, the country achieved a trade surplus of $831.4 million that month, Harmoko said.

He said the country gained a total trade surplus of $3.72 billion in the January-June period because its imports were recorded at only $14.67 billion for that period.

Harmoko said the government also decided that newsprint prices should be maintained at their current levels until Oct. 1, to wait for a conclusion of negotiations involving producers, newspaper publishers and the ministries of industry, trade and information.

Newsprint producers and newspaper publishers failed to reach agreement last week on a 9.5 percent increase proposed by the former.

Harmoko said yesterday's meeting also discussed the 17.2 percent increase in the number of tourist arrivals to 1.81 million during the first seven months of this year.

The country gained earnings of $2.12 billion from the tourist arrivals, he said. (riz)