On-year inflation rate above 8% in April: BPS report

Urip Hudiono, The Jakarta Post, Jakarta

Monthly inflation began to ease in April from its sharp rise in March, but still leaves year-on-year inflation unchanged above the 8 percent level, official figures from the Central Statistics Agency (BPS) show.

In its latest statistics of the country's consumer price index (CPI), the agency reported on Monday that the prices of goods and services in the country increased by 0.34 percent in April from their previous level in March. On a year-on-year basis, prices rose 8.12 percent as compared to April last year.

"This month's inflation was the result of a rise of all prices across the board, except in the prices of staple food," BPS chief Choiril Maksum said.

Monthly inflation shot up to 1.91 percent in March on the back of rising transportation costs, after the government cut fuel subsidies that were burdening the state budget, which increased domestic fuel prices by an average of 29 percent.

Inflation in March stood at 8.81 percent, with this year's first quarter inflation rate at 3.19 percent. The government is targeting full-year inflation at 7 percent this year.

BPS recorded that April's inflation was mainly driven by a 0.61 percent increase in the prices of household needs, followed by a 0.57 percent rise in processed food prices.

The cost of household needs -- comprising house rent, household supply prices, household fuel and electricity and water rates -- accounted for 0.17 percent of April's monthly inflation, while processed food prices accounted for 0.10 percent.

Transportation costs continued to increase by 0.62 percent last month, but have improved from the 15.44 percent surge in March.

The lower inflation rate in April as compared to March was also attributable to the 0.21 percent decrease in prices of staple food. The prices of staple food rose by 0.12 percent in March.

Choiril said April's inflation rate indicated the effects of increased fuel prices had begun to level out, but warned that inflation could pick up again on the recent volatility of the rupiah.

"The government should make sure that the rupiah does not hit the psychological level of Rp 10,000 per dollar," he said.

With an economy mostly driven by consumerism, a weaker rupiah would raise the prices of imported goods, further fueling inflation.

To further stem inflation, Choiril said the government should be prepared to ensure the supply of goods, particularly staple food, throughout the country.

"The recent harvest period might have helped keep down staple food prices, but if in the future there is a disruption in supply, then their prices could rise again," he said.

Analysts predict that the inflation rate will exceed the government's 7 percent target for this year, as several occasions prior to the end of the year may push prices up, particularly Idul Fitri, Christmas and New Year's holidays.