Inflation remains in check

Inflation remains in check

The Jakarta Post, Jakarta

Prices rose slightly by 0.36 percent in September, bringing the
inflation rate during the first nine months of the year to a
modest 2.48 percent, the Central Statistics Agency (BPS) reported
on Wednesday.

BPS attributed the slight rise in inflation to a 0.52 percent
decline in basic food prices, which helped offset a rise in
prices of other commodities and services.

Prices of processed food, beverages and cigarettes increased
by 0.34 percent; housing was up 1.03 percent; clothing 0.64
percent; health-care 0.63 percent; education, recreation and
sports 1.62 percent; and transportation and communications went
up by 0.05 percent.

Inflation in September this year compared to the same month
last year increased by 6.20 percent, which is slightly lower than
last month's annualized inflation rate of 6.38 percent.

The September inflation figure should help come close to the
government's full-year inflation target of about 6 percent. BPS
chairperson Sudarti Surbakti agreed to the target, saying that
with the current level, full-year inflation would only reach
between 6 percent to 7 percent.

The relatively benign inflation rate is one factor that
improves purchasing power and helps maintain stronger domestic
consumption, which is crucial as domestic consumption has been
the main mover of the country's economic growth in the past
years.

The relatively mild inflation should also pave the way for
Bank Indonesia to further slash its benchmark interest rate --
already at an all-time low at the moment -- and eventually push
banks to make loans more cheaper.

In its latest weekly auction, the central bank cut its
benchmark interest rate to 8.56 percent from 8.66 percent
previously.

Analysts have said that if full-year inflation could be
contained at around 6 percent, the central bank could cut the
interest rate on one-month SBI promissory notes to 8 percent by
the end of the year.