Inflation down in September as food prices drop

JAKARTA (JP): The Consumer Price Index (CPI), the important measure in calculating inflation, fell by 0.06 percent in September compared to the previous month thanks to falling food prices, the Central Bureau of Statistics (BPS) said on Monday.

BPS chairman Soedarti Surbakti said that the lower CPI caused a slight decline in the inflation rate in the period between January and September to 4.65 percent from 4.71 from the period of January to August

While the year-on-year inflation -- which compares a month's inflation rate with the same month in the previous year -- stood at 6.79 percent, according to BPS' report.

"In addition to falling food prices in August, government policies like loosening rice imports also contributed," Soedarti told a press meeting.

She said that although 31 commodities suffered inflation, the deflation of 16 commodities, mostly food prices, had a stronger impact.

"Falling prices of commodities like chicken, fresh fish, rice, eggs, tomato, cooking oil and potatoes had made a large contribution," she explained.

The bureau reported that the food index had contributed a total deflation of 0.64 percent as against the combined contribution of the remaining indexes of 0.58 percent.

Soedarti said the food index, which fell by 2.4 percent, was the only index recording a drop, with other indexes rising between 0.04 percent and 2.5 percent.

According to her, the government's decision to loosen rice import policies had reduced the prices of unhusked rice.

"Based on our research, prices of unhusked rice in several locations were below the standard," she explained.

The health index recorded the biggest increase with 2.5 percent, followed by education, recreation and sport with 1.19 percent, transportation and communication by 1.06 percent, the bureau reported.

Other price increases last month were -- housing, 0.69 percent; 0.56 percent for processed food, beverages and cigarettes; and 0.04 percent for clothing.

Estimate

Soedarti said that the increase in fuel prices could cause the annual inflation rate to reach about 9 percent, significantly exceeding the target of between 5 percent and 7 percent.

"There is a possibility that inflation would reach a double digit figure this year, but based on our model the additional effect on inflation would be a maximum of 1.2 percent," she explained.

The government raised fuel prices on Saturday from 9 percent to 25 percent to help reduce the huge fuel subsidy of Rp 44 trillion (US$5.1 billion) in this budget year.

Another factor likely to adversely affect the government's projection is the approaching holidays.

"Because of the upcoming Muslim fasting month, Idul Fitri holiday and Christmas holidays, there are indications that prices will soar," she added.

Meanwhile, Indonesia's export figures in August continues at record levels, reaching at US$5.54 billion up from $5.35 billion the month before. Export in August rose by 3.57 percent, with non-oil and gas exports growing by 0.76 percent to $4.2 billion.

Oil and gas exports grew by 13.86 percent to $1.3 billion on the back of strong crude oil prices.

BPS further reported that imports in August rose by 7.96 percent to $2.75 billion from $2.54 billion in the previous month.

Indonesia's trade surplus reached $2.79 billion in August, dropping slightly from $2.86 billion in July.

Soedarti said that from January to August exports grew by 31.78 percent to $40.25 billion compared to the same period last year.

Based on the export destination, Singapore, Japan and Malaysia recorded increases of $264.8 million, $76.8 million and $10.4 million respectively.

The Unites States, Indonesia's largest importer, recorded a drop of $58 million in imports followed by South Korea and Germany which imports dropping by $25.9 million and $23.8 million respectively.(bkm)