Indonesia’s Annual Inflation Rate Eased in August to 3.83 Pct

JAKARTA (TheInsiderStories) – Indonesia’s annual inflation rate eased in August, thanks to falling food prices, the Central Statistics Bureau (BPS) said on Monday (9/4).

The nation’s headline consumer prices increased 3.82 percent in August from the same period a year ago. The CPI , however fell 0.07 percent on a monthly basis.

Staple food components, like vegetables, fish, garlic, red onion, saw their prices declining in the month. Meanwhile, the cost of transportation, communication as well as financial services also declined.

An analyst said such low inflation rate may give a room for the central bank to further lower its benchmark interest rate.

Bank Indonesia last month unexpectedly lowered its benchmark policy rate for the first time since October last year, bringing the rate down by 25 basis points to 4.50 percent.

The move was accompanied by its plans to tweak credit rules in a bid to help stimulate commercial lenders’ loans and spur consumption.

Bank Permata Economist Josua Pardede said with August inflation was relatively lower, the central bank’s 4 percent inflation rate target by the end of this year will likely be achieved despite the inflationary pressures is predicted to build up in December.

The annual core inflation rate, which excludes government-administered prices like volatile foods, stood at 2.98 percent in August, easing from 3.05 percent in July.

The central bank governor said the government’s effort to intervene the market for food-commotities, like red onion, garlic, egg, and meat, apparently yielded in good result.

Bank Indonesia, he said, expected that annual inflation to hover at around 4 percent by the end of this year and 3.5 percent next year.

Writing by Rahmat Fiansyah