Sufficient Food Supply, Low Prices Kept Indonesia’s May Inflation Stable

Jakarta. Inflation is seen as stable in May as ample supply from the harvest season kept the price of raw foods low.

The consumer price index is estimated to have increased to 7.3 percent, according to the median estimation of eight economists surveyed by Bloomberg News. The index rose 7.25 percent a month earlier, its slowest pace in 10 months. The country’s Central Statistics Agency (BPS) is due to announce the figures for May’s inflation and April’s trade balance on Monday.

“There’s still enough supply from the rest of the harvest season to meet demand,” said David Sumual, chief economist at Bank Central Asia (BCA).

Average price of rice, the staple food for Indonesians, fell 4 percent in May compared to the same month a year ago, according to data from the Trade Ministry. The price of beef stood at 11 percent lower, while chicken and cooking oil fell 12 percent and 14 percent respectively.

The economy is also bracing for effects of the recent increase made in electricity tariff, which saw a 13 percent hike for medium-and large scale companies. It would take “two to three months,” David added, before businesses decide to pass their increasing costs to customers.

Aldian Taloputra, an economist at Mandiri Sekuritas, said that a slightly weakened rupiah would also contribute to rising inflation. The currency weakened 0.7 percent so far this month, making it more expensive for importers to bring in merchandises from overseas.

Still, the economists said rising inflation would not be enough to force Bank Indonesia to raise its benchmark rate, which has been at 7.5 percent for seven months.

Sumber: http://www.thejakartaglobe.com/business/sufficient-food-supply-low-prices-kept-indonesias-may-inflation-stable/

OPINION

In my opinion the month of fasting, feast day, school holidays and the new school year are some inflation factor. Therefore, the Government should really maintain the availability and stability of staple food prices due to the fluctuation in food prices will have an impact on inflation. Trend of price increase always occur one month up to one day ahead of Eid. But this situation seems to be better than last year due to food supply which sufficient. So the trend of rising prices is relatively decreased for this year. Although the condition of the rupiah is slightly weakened, it is more expensive for importers to bring merchandise from abroad. I guess the government does not need to import from abroad for this moment because supply food which sufficient.