Inflation stable in November: BPS

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.