Mon, 03 Jan 2000

Inflation rate fell to 2.01% last year

JAKARTA (JP): Inflation rose to 1.73 percent in December from 0.25 percent in November, bringing inflation for 1999 to 2.01 percent, the Central Bureau of Statistics announced on Friday.

The inflation rate in 1999 was just slightly higher than the 2 percent targeted by the government, but much lower than the 77.63 percent recorded in 1998.

The chief of the statistics bureau, Sugito Suwito, said the increase in inflation in December was predictable because demand traditionally strengthened around Christmas, Ramadhan and the New Year.

"The major contributors to inflation ... were increases in the prices of food, processed food, beverages, cigarettes and tobacco," Sugito said.

However, Sugito said inflation for December could have been higher if the supply of a number of food items, including rice, chicken and other meats, had been disrupted. "The supplies of these commodities have been so tremendous."

Sugito did point out that the inflation rate in December 1999 was higher than the 1.42 percent inflation in December 1998.

The first nine months of the 1999/2000 fiscal year beginning in April have seen 2.01 percent deflation.

"It is a figure similar to the whole year's, but with a negative sign," Sugito said.

Sugito said 1999 generally saw decreasing food prices, particularly from July until October. "But from November to December food prices increased slightly due to Christmas, the New Year and Ramadhan."

He said the country's inflation rate was not related to the domestic political situation. "We can see that in the general election month of June inflation was at minus 0.34 percent, not at all effected by the country's political agenda."

He also said inflation in October -- the month of the presidential election -- was 0.06 percent.

During 1999, the highest inflation rates were recorded in January, February and December. All of the other months saw either very low inflation rates or deflation.

"The inflation rate in 1999 only surged when there was a supply-demand imbalance," he said, adding that otherwise inflation remained relatively under control.

For 2000, Sugito said inflation would remain low as long as the balance between supply and demand was maintained.

Sugito predicted the inflation rate for 2000 would be between 6 percent and 9 percent higher than the economic growth of between 3 percent and 4 percent.

The factors which could push inflation in 2000, Sugito said, would be government policies such as a reduction of fuel and electricity subsidies, changes of import tariffs and a planned raise in the salaries of civil servants.

"All these are not external factors -- supply and demand -- but instead policies made by the government," he said.

Exports in November totaled US$4.39 billion, slightly lower than the $4.58 billion in October, sending January to November export revenue to $44.06 billion, a 1.94 percent decline from the same period in 1998.

The decline was mainly due to a fall in non-oil and gas revenue, Sugito said, adding that decreasing demand on the international market for Indonesian goods also contributed to the decrease.

Exports generally performed better toward the end of 1999 as compared to earlier in the year.

Imports in November increased slightly to $2.05 billion from $2.03 billion in October. January to November imports stood at $21.83 billion, a 12.45 percent decrease from the corresponding period the previous year.

The decline is attributable to the decrease in non-oil and gas imports, Sugito said. (udi)