Inflation set to drop despite rise in prices

JAKARTA (JP): This year's inflation rate is likely to be lower than last years's 9.24 percent, in spite of the projected gradual increase in rice prices, Central Bureau of Statistics Chairman Sugito Suwito said yesterday.

"This year's inflation rate is likely to reach about 8 percent to 9 percent; lower than last year's level of 9.24 percent," Sugito told the press after signing a cooperation agreement with the Australian Bureau of Statistics.

During the first eight months of this year the inflation rate has reached 6.41 percent, slightly lower than the 6.85 percent recorded for the same period of last year.

Chief of the National Logistics Agency Beddu Amang said last week that rice prices, which have increased this month, are likely to continue climbing gradually by between 1.2 percent and 1.8 percent each month until next February. He said the increases reflect the end of the harvest season and the beginning of the planting season.

The logistics agency was established by the government to help stabilize the prices of nine basic commodities by providing buffer stocks and selling the goods when the relevant harvest periods have ended.

Sugito said yesterday that the expected increases in the price of rice would be lower than the rate of inflation, so that it would not contribute to any increase in the inflation rate.

He said the price of rice in three months time would not much higher than its current level because there would be no substantial increase in demand up to the end of the year.

Demand for food and other basic commodities usually rises during the Moslem fasting month of Ramadhan and the concomitant Lebaran holiday, which will fall early next year.

"The current increase in rice prices is logical, because the harvest season is over and the price of fertilizer is climbing," Sugito said.(kod)