Inflation at 9.06%, govt upbeat on growth
Urip Hudiono, The Jakarta Post, Jakarta
On-month inflation hit 9.06 percent in September, the Central Statistics Agency (BPS) says.
However, the government is still keeping its single-digit target for the year-end despite the inflationary pressures likely in the months ahead from the fuel price hikes.
Unveiling its monthly reports on Monday, the BPS said inflation had increased by 0.69 percent in September from August, or 9.06 percent from the corresponding month last year. It has, meanwhile, accumulated 6.39 percent during the year's first nine- months.
"The increase in the prices of goods and services has happened across the board," BPS deputy chief Mulyono Muah said, citing a 1.43 percent monthly rise in educational costs from the new academic year, while clothing and processed food also increased by 1.18 percent and 1.16 percent, respectively.
However, he declined to comment on the inflation outlook for the remainder of the year after the Oct. 1 fuel price pushed fuels up by an average of 126 percent.
Separately State Minister for National Development Planning Sri Mulyani Indrawati said the recent fuel price hike could raise inflation expectations by 3 percent, resulting in a full-year inflation of around 12 percent.
"But this still depends on the central bank's policies to contain inflation by raising interest rates," she said.
Mulyani acknowledged that rising interest rates could hurt businesses and later slow down the economy, but trade-offs between the two were inevitable in the current situation, she said.
"We are, of course, aiming to strike a balance between inflation and economic growth, but rising interest rates while sacrificing a little short-term economic growth would be tolerable, as the policy is expected to ease down inflationary pressures within the next three months," she said.
Coordinating Minister for the Economy Aburizal Bakrie and Minister of Finance Jusuf Anwar, meanwhile, were upbeat that inflation would not break into double-digits by the end of the year.
"(Full-year) inflation is estimated to be just slightly below 10 percent," Aburizal said. "And next year, we can expect it to be around the 8 percent level."
The government had earlier targeted full-year inflation to reach 8.6 percent this year.
Inflation earlier shot up by 1.91 percent in March, after the government raised fuel prices by an average of 29 percent at the beginning of the month.
Such heavy inflationary pressure is expected to reoccur, considering the significant increase in the latest fuel price hike and the usual rising trend in inflation in light of year-end festivities of Idul Fitri, Christmas and New Year.
The central bank recently increased interest rates to 10 percent and hinted further hikes to stem the rising inflation. Higher rates can make loans to businesses and industries pricier, hampering their growth.
World Bank country director for Indonesia, Andrew Steer, however, said the fuel price hike would eventually be for the better of the country's economy, although the bank was still assessing its possible impact on the economy, including on inflation and economic growth.
"The policy will benefit the economy in the long term, but we are still watching out for its effects in the short term," he said.
;JP;URP; ANPAf..r.. BPS-exports-increase RI exports still grow JP/13/INFLAT
RI exports still grow
Indonesia's exports over the first eight months of the year were still up on strong global demand for the country's mining, industrial and agricultural products, the Central Statistics Agency (BPS) reported on Monday.
Indonesia's exports grew by 0.56 percent to US$7.03 billion in August, and reached $54.77 billion from January to August, a 23.94 percent increase from the same period in 2004.
Non-oil and gas exports, which account for more than three- quarters of Indonesia's total revenue from international trade, rose 24.55 percent to $42.57 billion in the first eight months of the year from the corresponding period in 2004.
Sales of oil and gas, meanwhile, rose 21.85 percent in the same period to $12.2 billion. -- JP