Jakarta, Nov 27 (Antara) - The government and the country's central
bank, Bank Indonesia (BI) will take all necessary steps to ensure that
the inflation rate stays between 7.3 and 7.7 percent after the recent
hike in subsidized fuel prices.
"We forecast that the inflation rate will hover between 7.7 and 8.1
percent. Of course, we are doing our best to achieve an inflation rate
of 7.7 percent," BI Governor Agus Martowardojo stated on Wednesday.
The BI governor has forecast that the inflation rate in November will
soar as a result of the hike in the prices of subsidized fuels, and in
December, it will increase by 2.0 percent.
The BI's inflation estimate of 7.7-8.1 percent in 2014 is higher than
the government's projection of 7.3 percent as the subsidized fuel price
hikes are expected to contribute 2.4-2.8 percent to the inflation rate.
Some 1.3 percent of the estimated 2.6 percent is a direct contribution
due to the increase in the prices of subsidized fuel oils, while some
0.7 percent is an indirect contribution in the form of increased
transportation cost and 0.6 percent is a result of the food, services,
and goods price hikes, he stated.
Finance Minister Bambang Brodjonegoro is content with the government's
efforts to curb the inflation rate at 7.3 percent, in spite of the
several higher projections.
"In essence, we are resolved to control inflation, so that it would be
in the range between 7.3 percent and 7.5 percent at the end of the
year," the finance minister noted.
He explained that while making the projection, the government has taken
into account the impact of fuel oil price hikes, which are expected to
contribute 2.0 percent to the inflation. It has also taken into
consideration the inflation assumption set in the revised 2014 state
budget at 5.3 percent.
On November 17, 2014, President Joko Widodo announced the increase in
the price of premium gasoline to Rp8.5 thousand per liter from Rp6.5
thousand and that of automotive diesel oil to Rp7.5 thousand per liter
from Rp5.5 thousand.
"Additional rate of inflation increase from a three-month baseline is
2.5 percent based on the calculation that every Rp one thousand increase
will contribute 1.2 percent to the inflation. As the government has
raised the fuel oil price to Rp two thousand, there will be an increase
of 2.0 percent up to December. With the baseline of 5.3 percent, the
inflation rate until the year-end will be 7.3 percent," the minister
explained.
According to economic analyst Iman Sugema of the Bogor-based Institute
of Agriculture (IPB), if the subsidized fuel oil price is raised by Rp
two thousand, then it will contribute 1.89 percent to the inflation rate
and 0.38 percent to the poverty rate.
Following the increase in fuel oil prices, Coordinating Minister for
Economic Affairs Sofyan Djalil said that the government is taking
various steps to contain the upward trend of inflation.
In its efforts to curb the inflation, the government has adopted
various measures, including monitoring transportation fares, logistics
arrangement, and the supply of main products, such as foods, among
others.
"We have past experience and realistic data about it. We will try to
curb the inflation with the experience we already have in an effort to
lessen the adverse impacts of subsidized fuel prices hikes on the
people," the chief economic minister stated.
The
government's efforts to control the inflation rate were discussed
during a coordination meeting attended by Chief Minister for Maritime
Affairs Indroyono Susilo, Home Affairs Minister Tjahjo Kumolo, Finance
Minister Bambang Brodjonegoro, and BI Senior Deputy Governor Mirza
Adityawara.
Sofyan
said that it was important to control public transportation fares,
applicable to both city and intercity buses, in a bid to curb inflation.
The fuel price hikes have a direct impact on this logistic component.
"The minister of transportation is adopting measures to control
transportation fares. A ministerial regulation has been issued regarding
the increase in transportation fares. Intercity buses are allowed to
increase fares by 10 percent. But, the fares of buses belonging to the
city governments can be regulated. In this case, the home affairs
minister will provide tariff rate increase, so that it could remain
under control," the chief economic minister stated.
The government even conducted different studies on the possibility of
providing incentives or compensation to public transportation operators
in a bid to control transportation fares.
Besides
this, the government will also carry out urban transportation
restructuring and encouraging the use of gas instead of premium gasoline
and diesel oil.
"We
are trying to get concrete and applicable studies to assist the
regional governments in arranging city transportation, including the use
of gas. This is an old idea, but its implementation is too slow. We
want this idea to be realized soon with a trial-test," Sofyan remarked.
The logistic distribution system should also be made more effective
where essential goods would not be stuck at ports, and the flow of
supplies will remain smooth.
"We have to ensure the effectiveness of logistics distribution at
ports, particularly consumptive goods, such as chili and onions. We have
to monitor the use of fast lanes," noted the minister.
The government will also do its best to maintain the smooth supply of
main consumptive goods by increasing food crop production, such as
chili, through the utilization of appropriate technology. Thus, the
inflation rate of food commodities will not soar.
"Actually, there is a structural problem here. As a big agrarian
country, it is questionable why it is importing chili. I hope a study
will be made in the near future to increase our food crop production.
Chili can be produced through the application of a sprinkler technology
or a greenhouse technology. We will try it and see next year whether the
chili problem (scarce supply) will still exist," Sofyan noted.
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(T.A014/INE/o001)
EDITED BY INE
(T.A014/A/BESSR/O. Tamindael) 27-11-2014 13:14: |
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