JP/13/Infla

JP/13/Infla

RI inflation to exceed target, touch 7%: BPS

Dow Jones Jakarta

Indonesia's inflation rate is expected to touch 7 percent for the whole year, exceeding the government's target of 6.5 percent - due mostly to the rupiah's weakness, a government official said Friday.

"For the first six months of this year, the consumer price had already risen 3.29 percent," La Ode Syaifuddin, the deputy chairman of the Central Bureau of Statistics, told reporters.

In the same period, the rupiah has fallen 9.5 percent against the US dollar.

La Ode said, however, that a higher consumer spending would be good for the economy, which is expected to have grown more in the second quarter than in the first.

The economy grew 4.46 percent on year in the first quarter. He didn't say exactly how much the economy is expected to have grown in the second quarter.

La Ode said an expected increase in consumer spending during the current presidential elections' period - which is likely to end in September latest - would stoke inflation. Religious festivities in the fourth quarter of the year will also add to inflationary pressures, he said.

The first round of presidential voting will be held Monday, followed by a face-off in September between the two highest vote winners if no candidate bags more than 50 percent of the votes.

Ahead of the parliamentary elections in April, political parties spent heavily, printing party flags and handing out small gifts such as instant noodles to voters.

That spending has continued. Aviliani, an economist with the Institute for the Development of Economics and Finance, an independent think-tank, estimates politicians will spend up to Rp 15 trillion (US$1.6 billion) this year.