Year-on-year inflation at 7.84% in July

Urip Hudiono, The Jakarta Post, Jakarta

Inflation in the country continued to creep up as an ongoing dry season and the recent avian influenza outbreak pushed food prices higher last month, official figures from the Central Statistics Agency (BPS) show.

The BPS reported in its latest report on Monday that the country's Consumer Price Index (CPI) increased by 0.78 percent in July from June, or 7.84 percent from their levels in July last year.

BPS chief Choiril Maksum said that last month's inflation was primarily due to seasonal factors, which had caused the supply of certain food commodities to drop amid increasing demand.

"This has resulted in a surge in their prices," he said, specifically mentioning red chili peppers.

"The government's recent decision to prohibit rice imports has also caused the commodity's price to rise."

Choiril further said that the recent outbreaks of avian flu in the country had also taken a toll in fueling the inflation.

"The outbreaks indeed caused poultry prices to decrease, but this was offset by the fact that people then switched to eating eggs, which caused their prices to sharply rise," he deduced.

Indeed, staple food prices, which contributed to 0.5 percent of July's inflation, increased the highest by 2.07 percent, led by a surge in the prices of eggs, spices, dairy products, vegetables and rice.

The BPS also noted that the country's recent gasoline scarcity had caused the price of kerosene in several regions to rise, causing the cost for housing, water, electricity and gasoline to increase by 0.31 percent.

Meanwhile, the government's decision to increase the excise on cigarettes by 15 percent last month also pushed inflation up.

"The rise in cigarette prices has accumulated to an average of 9 percent, as cigarette producers continued to hike their prices by a 4 percent rise last month, adding to the 5 percent in June," Choiril said.

Prices of processed food -- which includes cigarettes -- rose by 0.44 percent last month.

Effects from the new academic year starting in July had yet to be reflected in July's inflation, Choiril said, but those would be expected to put upward pressures on the inflation rate next month. Costs for education, recreation and sports rose by 0.95 percent in July, while that for clothing and health services rose by 0.55 percent and 0.31 percent respectively.

Choiril explained that with the high inflation rate through July, it would be quite difficult for the government to stay within its budget projection of 7.5 percent for the year.

"But it can still be done if the government works hard in containing inflation, particularly in ensuring the distribution of commodities in the country," he said.