GOVERNMENT TAKING STEPS TO CURB INFLATION DURING RAMADAN

By Andi Abdussalam

Jakarta, June 23 (Antara) - The high demand for food products during the current Muslim fasting month of Ramadan is forecast to boost inflation, which in May was the highest ever recorded in the month over the past seven years.          In the face of this, the government and Indonesia's central bank Bank Indonesia (BI) are cooperating by taking efforts to bring down the inflation rate in the current Ramadan fasting month, which lasts from June 18 to July 16, 2015.          "To reduce and control inflation during Ramadan, we need to coordinate with the government," BI Deputy Governor Erwin Rijanto stated.          The Central Bureau of Statistics (BPS) had noted that Indonesia's inflation was 0.5 percent in May, the highest monthly inflation in seven years. Rise in the prices of food products contributed to the inflation in May, BPS Chief Suryamin affirmed.          Rijanto believes that the system of logistics distribution posed a major obstacle that led to a rise in the prices of goods in several regions.          "Distribution is crucial. We have to discuss with the government about the areas of concern in the logistics distribution system," he emphasized.            The Institute for Development of Economics and Finance (Indef) stated that the government can keep inflation under control if it manages to maintain stability in the prices of energy and food products.          "Inflation data shows from year to year that if the prices of energy and food commodities are controlled, it is almost certain we can curb inflation," Indef Director Enny Sri Hartati pointed out.          The root cause of the problem of economic instability lies in the fluctuations in the prices of energy and basic household necessities, Hartati stated.          Increase in the prices of energy and basic necessities pushed up the country's inflation to 0.5 percent in May, or the highest monthly inflation so far this year, she remarked.          She said the purchasing power of the people was weakened by the instability in the prices of energy and food products.          The purchasing power of the people has been weakened by government policies such as the rise in the energy prices late last year that pushed up inflation, she affirmed.          BI had forecast that the country will continue to face inflationary pressures in June, similar to what it had faced in May when it was fueled by fluctuations in the food prices due to the shortage of stocks.          Therefore, the government is doing its best to maintain the availability of stocks and has conducted market operations in order to meet the rising demand of the people.          According to Chief Economic Minister Sofyan Djalil, the procurement of food products during the ongoing fasting month of Ramadan is crucial to maintain a low inflation rate in the June-July period.          "Procurement should be done domestically at a slightly higher price as long as the goods are available. If the goods are unavailable, the option to import should be discussed in a meeting," the coordinating minister for economic affairs stated on Friday, last week.          Djalil noted that the government had considered various risks that could threaten the availability of food commodities and disturb food crop harvests, including the possible impacts of El Nino.          However, the minister pointed out that food stocks in various regions were still believed to be adequate in the face of the Eid al-Fitr festivities that follow Ramadan.          "There is no problem now, but after the Eid holidays, we will see again. What is important is that the national stock of rice still amounts to 1.5 million tons. This must be available till the end of the year," he remarked.          The inflation in May pushed the country's inflation to 0.42 percent in the initial five months of the year. Year-on-year (YOY) inflation was recorded at 7.15 percent.          The core inflation in May was 0.25 percent, and YOY, it was 5.04 percent, Suryamin revealed.          The main contributors to the inflation were food products such as red onion, garlic, chili, fresh fish, chicken meat, and electricity.          Based on the spending groups, the foodstuff group accounted for 1.39 percent of the May's inflation; manufactured food, beverage, cigarette, and tobacco, 0.5 percent; and the health group, 0.34 percent.          Among the commodities whose prices increased and contributed to May's inflation included red chili, pure bred chicken meat and eggs, red onion, garlic, fresh fish, electricity tariff, tomato, and green chili.          In Jakarta, the housing, food, and transportation sectors were the main contributors.          "The main inflation contributors in Jakarta came from three major areas: the high rate of house rent, increase in transportation fares, and hike in prices of food stuff," Doddy Zulverdi, BI's director for monetary and economic policy affairs, stated.      In the face of possible inflationary pressures, the central bank and the government will cooperate to bring down the high inflation rate during the holy month of Ramadan.          BI Deputy Governor Erwin Rijanto said his bank received the inflation figures from their regional offices located throughout Indonesia.          In addition, the news about the surge in the prices of goods in regions was also sent by the regional inflation control teams (TPID).          Through such coordination, Rijanto affirmed that the central bank of Indonesia and the government can jointly encourage the development of the production sector, which is aimed at controlling the hike in the prices of goods.***3*** (t.a014/INE/o001) EDITED BY INE (T.A014/A/BESSR/O. Tamindael) 23-06-2015 12:54:0