I Watching out for Possible Inflation Hike

Bank Indonesia (BI/the central bank) is keeping watch on a possible increase in the inflation rate in the second semester of 2011 as a result of international inflationary pressures and government administered prices, the BI governor said.

 

"Last year inflation was high so that we believe inflation in the second semester this year will also be higher than in the first semester," BI Governor Darmin Nasution said.

He said that the international inflation could affect the inflation rate in the country because several countries like China had experienced high inflation.
"International inflationary pressure is still high. Several countries still continue to experience inflation increase. China up to May this year has recorded an inflation rate of over five percent," the BI governor said.
But if there is no significant change in the administered prices, despite prediction of increase, the trend of year-on-year inflation rate up to July this year is still low at five percent. Darmin said that a low inflation rate still could be predicted because the January-June calendar year inflation was still at 1.06 percent.
"Up to June, our year-to-date inflation was only 1.06 percent. You can imagine that it was less than 0.2 percent per month, so that even though it has a relatively big increase, it would remain low," he said.
However, if the administered prices have significant changes such as increase in the prices of fuel oils, food and rice then the inflation rate would reach about six percent year-on-year at the end of the year.
Darmin assured that BI would continue to watch external factors that could affect inflation and would predict when the inflation would start to go up. The government has changed its assumed figure for the inflation rate in the 2011 revised state budget from the previous 5.3 percent to 6 percent after considering possible increases in the world crude and food commodity prices.