Inflation exceeds 25 percent for first quarter

JAKARTA (JP): Indonesia's inflation rate soared to 25.13 percent in the first quarter of 1998, with month-on-month inflation rising 5.49 percent in March, the Central Bureau of Statistics said yesterday.

Bureau chief Sugito Suwito said the country's economic growth last year was 4.6 percent, but he predicted a shrinkage for 1998 without giving specific figures.

Some government sources, however, predicted that Indonesia's economy could contract by about 5 percent this year.

In international trade, Indonesia posted a US$1.78 billion trade surplus in January, an increase from $1.53 billion in December. The increase is attributed largely to a sharp decline in imports.

Sugito forecast a fall in the inflation rate in the months ahead because of imminent large rice harvests and the government's tight monetary policy which would dampen consumer demand.

However, he warned that if the government phased out certain subsidies, especially fuel subsidies, the inflation rate would quickly jump higher.

"If there is a drastic cut in subsidies, then inflation will of course shoot up quickly," Sugito said.

Indonesia has been mired in a deepening economic crisis since the rupiah began to slide in value last July. The crisis has crippled the country's businesses, leading to massive layoffs and sending prices soaring.

Sugito, however, predicted that the inflation rate for 1998 would be below 47 percent.

The inflation rate for the 1997/1998 fiscal year ending March 31 was 34.22 percent -- the highest during the New Order administration -- compared with 5.17 percent in the previous fiscal year.

"The monetary crisis and the drought last year pushed the inflation rate this high," he said.

Sugito said March's 5.49 percent inflation rate was much higher than that in March 1997 which recorded a deflation of 0.12 percent.

However, last month's inflation rate was relatively low compared with February's 12.76 percent jump and January's 6.88 percent rise.

The lessened rate increase was attributed to rice market operations by the State Logistics Agency (Bulog) and the beginning of rice harvests in some parts of the country.

Sugito said food prices, which increased 4.42 percent, were the biggest contributor to the consumer price index rise in March, accounting for 40 percent.

The second largest source was clothing, which rose 12.5 percent largely due to high import content. Clothing price increases accounted for 24 percent of March's inflation.

The housing price index rose 3.5 percent and miscellaneous goods and services increased 4.27 percent, mainly because of higher cigarette prices.

Sugito said the bureau would use the results of the 1996 cost of living survey as the basis for calculating inflation starting this month.

The new index will expand the coverage to between 250 to 300 commodity items in the 27 provincial capitals and 17 other major towns throughout the country. (aly/rid)