Inflation stable in November: BPS

The Jakarta Post, Jakarta

Prices increased slower than expected in November in spite of Ramadhan, which traditionally heightens inflationary pressures due to rising demand for goods and services, according to data from the Central Statistics Agency (BPS).

BPS reported on Wednesday that year-on-year inflation for November was 6.18 percent, nearly the same as the year-on-year October rate of 6.22 percent.

Several analysts had previously expected the November inflation to increase to around 6.3 percent.

The relatively stable inflation would help the central bank maintain the current low interest rate, which is at 7.41 percent. The record-low interest rate is expected to encourage banks to provide more affordable loans to the corporate sector and ease the government's burden in servicing its huge domestic debt.

The central bank expects inflation this year to reach from 6.5 to 7 percent.

The on-year November inflation was driven by rising prices across the board in all goods and services. The food price index, the largest contributor to inflation, rose 6.04 percent as demand increased, particularly for rice, during the Idul Fitri holiday season. Even so, the increase in food prices was slightly lower than its October figure of 6.17 percent.

The prices of processed foods, beverages, cigarettes and tobacco increased by 4.63 percent, while that of clothing rose by 5.43 percent, both showing a slower increase than the previous month.

The statistics agency did not provide an explanation for the relatively stable inflation, but a solid harvest in the agriculture sector due to favorable weather conditions and the smooth distribution of goods during the holiday season could be among the factors that restricted an increase in prices.

"This month's inflation was caused by a rise in the prices of almost all commodities, mainly food and transportation," BPS chief Choiril Maksum said.

Choiril further said the full-year inflation would likely meet the government target of 6.5 percent, although this figure would be dependent on the final monthly inflation in December.

Analysts expect inflation this month to ease down, but will likely remain at around 6 percent due to the Christmas and New Year festivities.

November's month-on-month inflation rose to 0.89 percent, sending the cumulative inflation figure in the January-October period to 5.31 percent.

Elsewhere, the BPS said the cost of education in November increased by only 0.04 percent, health care by 0.20 percent and housing by 0.25 percent.

The agency also said the telecommunications and transportation price index increased 0.48 percent, mainly due to higher oil prices in the international market.