Inflation to remain high despite drop in prices
JAKARTA (JP): The Consumer Price Index fell by 0.21 percent month-on-month in August, the first deflation since September last year, the Central Bureau of Statistics (BPS) reported on Friday.
BPS also said that year-on-year inflation eased to 12.23 percent from 13.04 percent in July, while inflation between January and August of this year reached 7.48 percent.
The bureau said that the deflation was primarily caused by a drop in the price of goods and services, especially in unprocessed food by 2.35 percent and clothing by 2.68 percent.
However, the price of processed food, beverages, cigarettes and tobacco increased by 0.41 percent; housing increased by 0.89 percent; health care by 0.20 percent; education, recreation and sports by 4.15 percent; and transport and communications by 0.01 percent.
Senior economist at PT Danareksa Securities Raden Pardede said that the August deflation was logical as inflation had peaked in July following earlier increases in the price of fuel and electricity.
"I think inflation reached a peak in July, now we will see an easing off of the pressures of the power hikes, and so we can expect more deflation in the next couple of months," he told The Jakarta Post.
Raden predicted that the economy would see more deflation in September and October, but inflation would kick in again in November and December.
"But inflation in December is seasonal, because during that month we have religious holidays," he said, referring to the Muslim holiday, Idul Fitri, which will fall in the same month as Christmas this year.
However, he said that annual inflation would remain in the double-digit range, as it was difficult to offset the high inflation rates that had occurred several months back.
"We are still predicting annual inflation at between 10.5 percent and 11 percent," Raden said.
The current strengthening of the rupiah against the U.S. dollar was expected to further weaken inflationary pressures.
However, it would not have an immediate effect on the price of imported goods, Raden said, adding that the effects of the rupiah would only be felt two or three months ahead.
The government has initially targeted inflation this year to reach 9.3 percent, but in a recent agreement with the International Monetary Fund, the inflation target for the year was set at 9 percent - 11 percent.
Elsewhere, BPS reported exports increased slightly in July by 0.91 percent to US$4.85 billion from $4.80 billion in June, sending the total for January-July to $34.15 billion.
"This is a 1.72 percent decrease compared with exports during the same period last year which totaled $34.75 billion," BPS chief Soedarti Surbakti said.
She said that the slight rise in exports was caused by a 1.6 percent increase in non-oil and gas exports.
Non-oil and gas exports rose to $3.77 billion compared with $3.71 billion the previous month, but were down 3.61 percent between January and July this year to $26.09 billion, compared with last year.
Oil and gas exports on the other hand declined 1.44 percent to $1.07 billion in July from $1.86 billion in June, due to a decline in exports of crude oil.
July imports declined by 10.63 percent to $2.48 billion compared with the previous month.(tnt)