Indonesia records six straight months of deflation

Indonesia records six straight months of deflation

JAKARTA (JP): Indonesia's consumer price index, which measures
inflation, declined for a sixth consecutive month in August by
0.93 percent from the level in July, driven particularly by lower
unprocessed food prices, the Central Bureau of Statistics (BPS)
reported on Friday.

BPS chief Sugito Suwito said that annualized inflation during
the month was 5.77 percent, compared to the government 1999
inflation target of less than 6 percent.

"This is due to a continuing decline in food prices because of
a surplus in food commodities including rice, vegetables and
spices," he told a news conference.

"It's unusual for inflation to still be negative (in August),"
he said, pointing out that the rice harvest usually peaked in
June.

Rice weighs heavily in the basket of goods used in calculating
the consumer price index.

Indonesia has continued to enjoy deflation since March after
the economy suffered hyperinflation of more than 77 percent in
1998 when the economic crisis heightened.

BPS said that food prices dropped by 4.02 percent in August,
housing by 0.11 percent and transportation and communications by
0.15 percent.

It said the major contributor to the decline in food prices
were rice, chicken meat, shallots and red chili.

But the bureau said prices of processed food, beverages,
cigarettes and tobacco increased by 0.21 percent, clothing by
0.83 percent, health expenses by 0.68 percent, and education,
recreation and sports expenses by 1.59 percent.

The Bank Bali scandal plus social and political troubles in
several parts of the country sent the rupiah tumbling again last
month, causing higher prices of imported raw materials, a major
component in the country's manufacturing sector.

Sugito said inflation for the first eight months of 1999 was
0.71 percent, while inflation for the first five months of the
current 1999/2000 fiscal year ending in March 2000 was minus 3.24
percent.

BPS said the highest monthly inflation in August was seen in
Ambon at 7.02 percent. Ambon, the capital of Maluku province, has
been gripped by bloody communal clashes over the past couple of
months.

The bureau added that inflation in Dili, the capital of East
Timor province, was also relatively high at 0.65 percent.

BPS said that Banjarmasin, the capital of South Kalimantan,
enjoyed the best rate of deflation of 2.77 percent.

Exports

Meanwhile, BPS said that exports in July increased by 11.56
percent to US$3.97 billion from $3.56 billion in June.

But it said that exports in the January-July 1999 period was
down by 12.09 percent to $25.62 billion compared to the same
period last year.

The bureau said that non-oil and gas exports in July increased
by 8.17 percent to $3.26 billion from the level in the previous
month, but non-oil and gas exports in the January-July period
declined by 13.43 percent from the same period in 1998.

BPS reported that imports in July rose by 3.63 percent to
$1.96 billion from $1.89 billion in June.

But it said that imports in the first seven months of this
year were down by 14.28 percent to $1.02 billion compared to the
same period in 1998.

The importation of consumption goods in the January-July
period jumped by 36.04 percent to $1.02 billion from the 1998
January-July period.

"But this doesn't mean that our imports are dominated by
consumption goods," Sugito said, pointing out that consumption
goods only contributed 8.87 percent to overall imports.

He said the largest contributor to the overall import figure
was raw materials, which contributed 78.04 percent.

"This means that our industry is still moving, but very
slowly," he said.

The importation of raw materials in the first seven months of
this year was down by 5.54 percent, BPS said.

But it added that the importation of capital goods fell by
50.03 percent.

"This means that there were practically no new investments,"
Sugito said.

BPS also reported that tourist arrivals in July increased by
23.09 percent to 379,500 tourists from 308,400 in June.

The cumulative tourist arrivals figure for the first six
months of this year was 2.24 million, a 10.86 percent increase
from the same period in 1998, the bureau said. (rei)