This year's inflation may reach double-digit

JAKARTA (JP): The country's inflation rate will most likely reach the double-digit level this year if the government goes ahead with its plan to raise electricity billing rates next month, economist Sjahrir says.

"The new electricity tariffs will trigger a cost-push inflation to reach a double-digit figure," Sjahrir told reporters before addressing a seminar here yesterday.

The government, under the Soeharto administration, has been successful in controlling inflation at less than 10 percent per annum for more than 20 years and has pledged to check it at about five percent annually in the coming five years.

However, the inflation rate reached 7.38 percent in the first nine months of this year.

The government confirmed on Wednesday that electricity billing rates will rise by around three percent next month. The Minister of Mines and Energy I.B. Sudjana is scheduled to hold a press conference about the government's decision on electricity tariffs this afternoon.

Sudjana said on Wednesday that the government plans to adjust electricity tariffs every three months in line with the developments in fuel prices, the depreciation of the rupiah and the country's rate inflation.

Sjahrir said yesterday that the rise in electricity tariffs indirectly affects the prices of other goods and services such as housing.

The economist, however, praised the government's decision to adjust electricity tariffs at a gradual rate every three months.

"That way will shock the public much less than one high hike," he said.

He also warned that if his prediction on the inflation figure proved accurate, he feared that a rush on the dollar might take place. (hdj)