Jakarta, Aug 1 (Antara) - The government has been able to keep in check the country's inflation rates over the past months.
This is indicated by the July 2015 inflation rate of 0.8 percent, lower than the average rate of 0.86 percent recorded every July over the past five years.
Governor of Bank Indonesia (BI), the central bank, Agus Martowardojo, said on Friday that compared with the average 0.86 percent month-to-month (mtm) July inflation rate over the past five years, the inflation rate in July 2015 showed that the government had been able to curb the inflation rate.
"We have previously predicted that the mtm July 2015 inflation would be at 1.12 percent. But it turned out to be lower than that. This shows an improved condition," the Indonesian central bank governor noted.
BI officials expected that the July 2015 inflation rate would be lower than 0.8 percent, yet this level is relatively good and indicated the government¿s success in keeping inflation in check.
"Inflation up through the fourth week of July 2015 is actually higher than what we have previously expected. We have earlier recorded an inflation rate of 0.5 percent, now we have 0.8 percent mtm," Agus Martowardojo said at his office.
A survey showed that inflation in the first week of July was 0.46 percent, up to 0.66 percent in the second week and to 0.76 percent in the third week.
"If we could maintain inflation at 0.76 percent until the end of this month, it would be the lowest in July in the past five years," Agus Martowardojo said on Friday, July 24.
He is optimistic that the inflation target at 4.0 +1 percent in 2014 will be achieved by the end of the year.
The expectation to record low inflation in July 2015 was based on the inflation rate in the third week of July, which was recorded at the low level of 0.76 percent.
"The inflation rate in the third week (of July) was lower than predicted. This indicates that it can still be kept in check," Martowardojo said after attending an Eid al-Fitr gathering at the Financial Services Authority building on Monday, July 27.
Earlier, the central bank had predicted that inflation in the third week of July would reach 1.12 percent as a result of hikes in the prices of basic commodities during the fasting month of Ramadan.
However, after seeing the low level of 0.76 percent inflation in the third week of July, BI estimated recently that the inflation rate in July, which coincided with the festival of Eid al-Fitr, could potentially be the lowest, as compared to the average monthly inflation recorded in the same period in the past five years.
Martowardoyo also stated that since 2010, the average monthly inflation rate in July reached 0.85 percent.
The BI governor admitted that the lower inflation rate in the third week of July was a result of the public's declining purchasing power. "We expected to see a much higher inflation with the Eid al-Fitr festivities," Agus said.
However, their declining purchasing power did not entirely indicate that the domestic economy was under pressure.
The drop in people's purchasing power was a result of external factors, including low prices of global commodities, which caused people's income to decline.
"The prices of red chili, rice and other basic commodities were on the rise, but they could still be kept in check and inflation could be curbed at a low level," he pointed out.
This were feared to trigger a decline in the people's purchasing power.
"However, the thing that we have been worrying about most is inflation. Now that inflation is well under control, we can breathe with relief," he said.
He said the fact that inflation is under control indicates that the country's economic restructuring reform has continued and would contribute to improving the country's economic fundamentals.
So far, the central government and regional administrations have coordinated well to control inflation. Further efforts to control inflation were concentrated on transportation costs, which usually rises during the Eid al-Fitr festivities.
Also, the central bank cooperated with the government to lower the inflation rate during the holy fasting month of Ramadan.
"To reduce and control inflation during Ramadan, we need to coordinate with the government," BI Deputy Governor Erwin Rijanto said late last month.
For this purpose, BI decided to maintain its reference rate at 7.5 percent for the fourth consecutive occasion to curb inflation, maintain macroeconomic stability and improve current account deficits after it reduced the rate by 25 basis points in February.
The central bank's board of directors also decided to maintain the deposit facility rate at 5.5 percent and lending facility rate at 8.0 percent.
"The decision was in line with the efforts to maintain inflation at a targeted rate of 4 plus/minus one percent in 2015 and 2016, and to direct the current account deficit to a healthier level, at between 2.5 and 3.0 percent of the gross domestic product in the medium term," BI's Executive Director of the Communication Department, Tirta Segara, stated.
Regarding the current drought which struck a number of provinces in Indonesia, BI Governor Agus Martowardojo said that the central bank had taken anticipatory steps and coordinated with the central and regional governments.
"We are paying much attention to the stock and distribution problems to curb inflation," Martowardojo said.
He underlined the importance of available stock and smooth distribution, particularly of food commodities, so that prices would remain at a reasonable level.
"If we look at the inflation rate now, we will see a correction of prices going down, such as the prices of eggs and chickens. Prices which are still on the rise are those of chili and transportation fares," the BI governor remarked.***3***
(T.A014/INE) (T.SYS/A/BESSR/F. Assegaf) 01-08-2015 12:41:0 |
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