Inflation rate recovers after deflation in June

Inflation rate recovers after deflation in June

JAKARTA (JP): Rising food prices pushed up the inflation rate
in July, with the consumer price index rising 0.68 percent after
June's deflation of 0.07 percent, Minister of Information Harmoko
said yesterday.

Harmoko attributed the increased inflation rate to a 1.04
percent rise in the price of food, which had fallen 0.05 percent
in the previous month.

"Prices of a number of food products such as eggs, milk and
fresh fish rose because of distribution problems, rather than
because of supply shortages," he told reporters after a monthly
cabinet meeting on the economy.

Housing prices increased 0.42 percent in July, clothing prices
rose 0.51 percent and the prices of other goods and services rose
0.55 percent.

July's inflation brought the cumulative inflation rate for the
January to July period to 4.7 percent, much lower than the 6.09
percent figure recorded for the same period last year, he said.

On international trade, the minister said that total exports
increased slightly to US$4.07 billion in May from $4.01 billion
in April. Imports also increased slightly to $3.8 billion from
$3.6 billion.

The country's monthly trade surplus, as a consequence, dropped
to $203.1 million in May from $366.2 million in April, he said.

He said the drop in the trade surplus did not reflect the
country's worsening export performance because all of Indonesia's
top-ten export products, except plywood, had gained
significantly.

In the January to May period, total exports were $19.34
billion and total imports were $17.17 billion.

"The total surplus in the January-May period reached $2.16
billion," he said.

Exports

According to the minister, the performances of the country's
major exports in May were promising despite the drop in the trade
surplus. Textile exports, for example, increased 10.35 percent.
Exports of processed rubber rose 8.43 percent, steel products
rose 38.5 percent, and coconut and palm oils rose 18.96 percent.
Plywood exports, on the contrary, dropped 1.23 percent.

The limited cabinet meeting on economic affairs, which is held
every month, discussed the latest developments in the country's
economy.

An important topic raised at the meeting was the assessment of
the supply and demand of certain strategic commodities such as
rice, sugar, flour, cement and fertilizer.

Harmoko said the cement supply, which was often interrupted
during rainy seasons, was expected to have no major problems this
month.

The cement stock, which is expected to reach 845,304 tons by
the end of this month, is sufficient to meet demand, he said,
adding that the supply of other important commodities such as
rice, cooking oil and fertilizer would also remain under control.

On the government's plan to promote more sugar plantations
outside of Java, Harmoko said that thousands of hectares of land
had been appropriated.

"The President has told related ministries to involve private
companies in the sugar plantation expansion," he said.

A number of provinces are ready for the expansion project,
including Lampung, South Sumatra, Central Kalimantan, East
Kalimantan, South and Southeast Sulawesi, Maluku, Irian Jaya and
East Timor.

Under the program, the annual sugar production in the
provinces outside of Java is expected to reach 1.51 million tons
by the year 2000. In that year, sugar production in Java is
expected to decline to 1.46 million tons, he said. (hen)

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