Dion Bisara
Indonesian Inflation Tracks Lower in October After Ramadan
Inflation increased at a slower pace in October, as rises in food and transportation costs fell back after accelerating during Ramadan and the Idul Fitri holiday in September, the Central Statistics Agency said on Monday.
The agency, known as the BPS, said the inflation rate was 2.57 percent in October, slightly lower than economists had been expecting, compared with 2.83 percent in September.
BPS chief Rusman Heriawan said the easing inflation was partly caused by falling costs for transportation and financial services after Ramadan and the Idul Fitri holiday. After the holiday, the price of food, which has the biggest weighting on the consumer price index, also returned to normal, he said.
Rusman said he did not see any chance of inflation accelerating sharply during the rest of this year, “unless the government decides to hike fuel or electricity prices, which is very unlikely.” He predicted inflation in 2009 could end up at below 4 percent, the lowest in many years.
Eric Alexander Sugandi, an economist from StandardChartered Bank, said rice production this year had been good and the State Logistics Agency (Bulog) had done a good job stockpiling and distributing staple foods. “It’s a big factor in containing inflation this year,” he said.
Eric shared the view that inflation was unlikely to rise sharply this year. “Oil prices are relatively stable. Last year, oil prices rose quickly because investors in the US were moving their funds from the capital markets to commodities. I don’t see this happening now,” he said.
Tony Prasetyantono, chief economist at PT Bank Negara Indonesia, said October’s easing inflation indicated inflation for 2009 could be below 4 percent. This was because people remained reluctant to spend due to the global economic slowdown, he said.
“My estimate for inflation is 3.7 percent this year,” Tony said. “First, people are still hitting the brakes on their consumption and businesses remain reluctant to increase their retail prices.”
Most economists believe the central bank is likely to keep its key interest rate steady at 6.5 percent on Wednesday.
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