Inflation tumbles to 0.49% in May

JAKARTA (JP): Indonesia's inflation rate declined to 0.49 percent in May, representing a sharp drop from this year's high of 1.6 percent in April, the government announced yesterday.

"President Soeharto instructed all related government institutions to continue efforts to maintain a slow increase in consumer prices, so that inflation will not reach a double digits this year," Minister of Information Harmoko told reporters after a limited cabinet meeting on the economy at the Bina Graha presidential office yesterday.

Price increases in May, added to the high consumer price indices of over one percent recorded in January, February and April, brought the inflation rate during the first five months of this year to 5.22 percent, higher than the five percent level targeted by the government.

Last year's annual inflation rate, at 9.24 percent, was slightly lower than the 9.77 percent recorded in 1993.

Harmoko said yesterday that the decline in the inflation rate in May was related to a slowing in the growth of food prices from 1.34 percent in April to 1.25 percent in May, as well as a drop in the growth of real estate prices from 2.31 percent to 0.02 percent.

The index of clothing prices rose by only 0.11 percent in May, he said, while service prices rose by only 0.2 percent.

"But the President, in spite of the decline in the growth of food prices in general, was concerned over the increase of vegetable prices by 15.35 percent and spice prices by 3.27 percent in May," Harmoko said.

He said that, on the basis of that concern, the President had instructed State Minister of Food Ibrahim Hasan to investigate the causes of the sharp increases in the prices of those items.

Harmoko said Indonesia's exports increased slightly from US$3.42 billion in February to $3.48 billion in March, while imports also increased, from $2.98 billion to $3 billion, during the same period.

Nevertheless, the country enjoyed a trade surplus of $477 million in March, as compared with $440 million in February, he said.

March's export revenue was comprised of $883.6 million from exports of oil and natural gas and $2.6 billion from non-oil products.

"During the 1994/1995 fiscal year, ended in March, Indonesia recorded export revenues of $41.73 billion and import revenues of $33.72 billion," Harmoko said.

He said that the money supply, which fell from Rp 47.54 trillion ($21.37 billion) as of February to Rp 45.13 trillion as of March, further declined to Rp 44.79 trillion as of March. (riz)