Inflation in October slowed to 6.22%

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.