New school year to push inflation up
New school year to push inflation up
The Jakarta Post, Jakarta
Inflation in July is expected to accelerate compared to the
previous month due mostly to the start of new school year, a top
official of the Central Statistics Agency (BPS) said on Tuesday.
While prices of many basic food commodities were likely to
remain stable, inflationary pressure would most probably come
from hikes in book prices and other education-related items, new
BPS chief Choiril Maksum said.
However, he refused to say as to what level inflation would
rise, saying the official figure would be available on Aug. 2.
Monthly inflation in June was 0.48 percent, as the falling
rupiah pushed prices of basic food commodities higher.
Meanwhile, on-year inflation during the month (comparing to the
same month last year) stood at 6.83 percent. Annualized inflation
in May was 6.47 percent.
Inflationary pressure has intensified during the past two
months, creating fears that the government's full-year inflation
prediction of 6.5 percent will be surpassed. Some expects
forecast inflation for the year to reach around 7 percent.
During the first semester, inflationary pressure came from
various sources, including a hike in utility prices, soaring oil
prices and the fall of the rupiah against the U.S. dollar.
The local currency has fallen by double digits so far this
year due to a combination of economic uncertainties at home and
overseas, and also political concerns stemming from the July 5
presidential election, although it recently rebounded as the
election turned out to be trouble-free and orderly.
Mild inflation should help maintain people's purchasing power
-- a prerequisite to strong domestic consumption, which has
become the backbone of economic growth during the past couple of
years.
It will also help ease pressure on the central bank to
increase its benchmark interest rate, particularly amid the rise
of the U.S. rate.
Rising domestic interest rates would otherwise hurt the
economy, as lending would become more expensive.