Year-on-year inflation in June fell to a nine-year low hitting only 3.65 percent, as economic indicators showed signs of economic recovery under way.
The Central Statistics Agency (BPS) reported Wednesday that on a year-on-year basis, inflation was only 3.65 percent in June this year, compared to 6.04 percent in the previous month and 11.03 percent in the corresponding month last year.
The y-o-y inflation rate this June hit a nine-year low, according to Bloomberg data.
The agency’s deputy head on statistics, distribution and services, Ali Rosidi, said y-o-y inflation had been “high” in June last year because fuel prices had soared at that time, resulting in a month-to-month inflation increase of 2.46 percent.
There was no such corresponding increase this year.
The overall inflation rate also significantly dropped partly due to the rates of deflation in January and in December of 2008, which were 0.07 percent and 0.04 percent, respectively, as well as because of continued slowing inflation in the previous months of this year
There were also some very marginal but statistically insignificant increases in the rate of inflation for some specific price indices in June, for example by 0.29 percent for tobacco, beverages and processed food; by 0.04 percent for housing, water, electricity, gas and fuel; by 0.3 percent for garments; by 0.23 percent for health costs; by 0.09 percent for education, recreation and sport and by 0.18 percent for transportation, communication and financial services.
Ali said the largest contribution to these minor increases in inflation came from a 0.06 percent rise in tobacco, beverages and processed food, while food ingredients contributed a 0.04 percent rate of deflation.
With easing y-o-y inflation, Bank Indonesia may make further cuts in its base rate which now stands at 7 percent.
Ryan Kiryanto of Bank Negara Indonesia (BNI) was of the opinion that there was still room for BI to cut its rate by 25 basis points to 6.75 percent, “This gives hope the BI rate will fall at least 25 basis points pushing bank lending rates to decline.”
BI has cut its rate for seven straight months from 9.5 percent in November to 7 percent in June to spur growth.
BI is scheduled to hold its collegial meeting on Friday.
“Bank responses won’t be as fast [in cutting lending rates], depending on their liquidity and third-party funds. In general, the trend for lending rates should decline,” he said.
Lower lending rates may prompt businesses to start borrowing money for expansion, spurring growth.
Indonesia’s economy is forecast to grow 4.6 percent in the second half of the year, with full-year growth at 4.3 percent, Finance Minister Sri Mulyani Indrawati said Tuesday.
The estimate is that economic growth might have reached 4.1 percent in the first half of 2009. BPS will release official figures next month.
| 
|
|
|
|
|
|
|