Inflation down in September as food prices drop

Inflation down in September as food prices drop

JAKARTA (JP): The Consumer Price Index (CPI), the important
measure in calculating inflation, fell by 0.06 percent in
September compared to the previous month thanks to falling food
prices, the Central Bureau of Statistics (BPS) said on Monday.

BPS chairman Soedarti Surbakti said that the lower CPI caused
a slight decline in the inflation rate in the period between
January and September to 4.65 percent from 4.71 from the period
of January to August

While the year-on-year inflation -- which compares a month's
inflation rate with the same month in the previous year -- stood
at 6.79 percent, according to BPS' report.

"In addition to falling food prices in August, government
policies like loosening rice imports also contributed," Soedarti
told a press meeting.

She said that although 31 commodities suffered inflation, the
deflation of 16 commodities, mostly food prices, had a stronger
impact.

"Falling prices of commodities like chicken, fresh fish, rice,
eggs, tomato, cooking oil and potatoes had made a large
contribution," she explained.

The bureau reported that the food index had contributed a
total deflation of 0.64 percent as against the combined
contribution of the remaining indexes of 0.58 percent.

Soedarti said the food index, which fell by 2.4 percent, was
the only index recording a drop, with other indexes rising
between 0.04 percent and 2.5 percent.

According to her, the government's decision to loosen rice
import policies had reduced the prices of unhusked rice.

"Based on our research, prices of unhusked rice in several
locations were below the standard," she explained.

The health index recorded the biggest increase with 2.5
percent, followed by education, recreation and sport with 1.19
percent, transportation and communication by 1.06 percent, the
bureau reported.

Other price increases last month were -- housing, 0.69
percent; 0.56 percent for processed food, beverages and
cigarettes; and 0.04 percent for clothing.

Estimate

Soedarti said that the increase in fuel prices could cause the
annual inflation rate to reach about 9 percent, significantly
exceeding the target of between 5 percent and 7 percent.

"There is a possibility that inflation would reach a double
digit figure this year, but based on our model the additional
effect on inflation would be a maximum of 1.2 percent," she
explained.

The government raised fuel prices on Saturday from 9 percent
to 25 percent to help reduce the huge fuel subsidy of Rp 44
trillion (US$5.1 billion) in this budget year.

Another factor likely to adversely affect the government's
projection is the approaching holidays.

"Because of the upcoming Muslim fasting month, Idul Fitri
holiday and Christmas holidays, there are indications that prices
will soar," she added.

Meanwhile, Indonesia's export figures in August continues at
record levels, reaching at US$5.54 billion up from $5.35 billion
the month before.

Export in August rose by 3.57 percent, with non-oil and gas
exports growing by 0.76 percent to $4.2 billion.

Oil and gas exports grew by 13.86 percent to $1.3 billion on
the back of strong crude oil prices.

BPS further reported that imports in August rose by 7.96
percent to $2.75 billion from $2.54 billion in the previous
month.

Indonesia's trade surplus reached $2.79 billion in August,
dropping slightly from $2.86 billion in July.

Soedarti said that from January to August exports grew by
31.78 percent to $40.25 billion compared to the same period last
year.

Based on the export destination, Singapore, Japan and Malaysia
recorded increases of $264.8 million, $76.8 million and $10.4
million respectively.

The Unites States, Indonesia's largest importer, recorded a
drop of $58 million in imports followed by South Korea and
Germany which imports dropping by $25.9 million and $23.8 million
respectively.(bkm)