Inflation in October slowed to 6.22%

The Jakarta Post, Jakarta

Prices rose at a slower rate in October mainly because of an abundant supply of rice that helped ease inflationary pressures caused by the soaring oil price and weaker rupiah.

The Central Statistics Agency (BPS) reported on Monday that the annualized inflation rate in October declined slightly to 6.22 percent, from 6.27 percent in September, and that year-on- year inflation has been on a declining trend over the past three months.

Inflation had been expected to accelerate to 6.4 percent last month, a median forecast of nine economists surveyed by Bloomberg showed.

However, inflation in the coming months may rise again as demand for goods and services increase during Idul Fitri and the year-end festivities, and some economists are concerned that the country might pass its full-year inflation target of 7 percent.

Central bank officials have played down the concern, and said recently it was optimistic that inflation this year would be less than 7 percent on the back of the rice harvest and because of the dollar's weaker global trend, which would keep down costs for imported raw materials.

Meanwhile, the high global price of oil is deemed to have a limited impact on the prices of local goods, as the government has provided a fuel subsidy for the transportation sector.

Some government officials recently said the new administration would not raise domestic fuel prices until the end of the year.

Bank Indonesia has maintained a relatively stable benchmark interest rate at around 7.41 percent, largely due to the mild inflation.

Keeping a mild inflationary environment is vital to the central bank's maintaining a low interest rate, which would in turn help accelerate economic growth.

Elsewhere, the BPS said month-on-month inflation in October increased by 0.56 percent from the previous month.

"All prices were up in October," BPS chief Choiril Maksum said.

The cost of basic foods rose 1.31 percent, while processed foods were up 0.29 percent and clothing rose by 0.59 percent.

In addition, the cost of education increased by 1.27 percent, health by 0.13 percent and real estate by 0.29 percent.

The Agency also said a rise in local telephone charges and high crude oil prices throughout the month pushed up the cost of telecommunications and transportation by 0.04 percent.