Inflation hits 46.5% in first semester

JAKARTA (JP): The month-on-month consumer price index rose 4.64 percent in June, taking the inflation rate to 46.5 percent for the first semester of this year, the Central Board of Statistics announced yesterday.

This month's inflation figure took the year-on-year rate to 56.67 percent.

The board's chief, Suwito Sugito, told a press conference: "The June figure was largely due to increases in the prices of rice, food flavoring and gold jewelry."

Increases in the price of rice contributed 25 percent to the inflation figure rise, while more expensive gold jewelry contributed 14 percent to the rise.

"Amid the current crisis conditions, people prefer to invest their money in gold," he said on the reason for the price increase of the commodity.

He also said that with the sharp decline in people's purchasing power, the main inflationary pressure had shifted to the basic foodstuffs sector.

"Of the five largest contributors to the June inflation figure, four were foodstuffs."

Increases in prices this month have been less severe than the worst price increases during January to March.

Sugito said he was optimistic inflation would not exceed the government's target of 80 percent for this year as consumers' worsening buying power would soften inflationary pressures in the coming months.

He pointed out that the effects of the El Nio weather phenomenon should disappear in the second semester of the year, which would improve the country's rice harvest.

He also said that the 3.1 million metric tons of rice to be imported by the government this year would stabilize the availability and price of the commodity.

The government's huge subsidies of basic essentials, including rice, would also help stabilize their prices.

Controlling the price of rice is an important element in curbing inflation because, amid the sharp fall in people's purchasing power, the main pressure on the consumer price index would come from the foodstuffs category, Sugito said.

Export-Import

He also said that exports in January through April were US$16.27 billion, against imports worth $9.08 billion.

Exports in April were $3.75 billion, compared to imports of $1.87 billion, resulting in a trade surplus of $1.87 billion. The corresponding figure for March was $1.97 billion.

Exports declined in value in April 1.9 percent due to a 34.1 percent fall in oil and gas exports against a 9.1 percent rise in non-oil and gas exports.

Imports fell 36.1 percent during the month.

"With the lower imports, our foreign exchange reserves are enough for more than five months' imports," Sugito said. (rei)