T

he government will flood the market with imported basic-food commodities to help push down prices and ease inflationary pressure during the consumption-heavy Ramadhan and Idul Fitri holidays.

Coordinating Economic Minister Hatta Rajasa said on Wednesday that the government would boost imports to ensure food prices were reasonable during the annual consumption frenzy.

'€œThis condition is seasonal, therefore, extra supplies are necessary to meet demand,'€ Hatta said after a meeting to address the recent food price increases, which were higher than previous years.

Hatta said he had ordered state logistics agency Bulog to accelerate shipments of frozen meat, particularly by air, and source additional livestock.

Bulog arranged the immediate delivery of 2,000 tons of frozen beef from Australia and New Zealand to ensure quick distribution, especially in Greater Jakarta.

The agency will import a total of 3,000 tons of frozen beef during the festive season.

'€œOur target is to lower beef prices to less than Rp 75,000 (US$7.50) per kilogram from the current
Rp 100,000,'€ the agency'€™s chief Sutarto Alimoeso said.

The Trade Ministry will also aim to accelerate the slaughtering of livestock. At present, there are 190,000 head of livestock available at domestic abattoirs.

Shortages in beef has pushed up the price of alternatives, such as chicken. The average price of poultry soared on average by 70 percent this week, according to the Agriculture Ministry.

The government will also increase the import allocation of particular food commodities, such as chili and shallots, as domestic supply suffered due to harvest delays.

Food prices have been key contributor to inflation. A lack of shallots, garlic and chili '€” the main seasoning ingredients in local food '€” put severe pressure on inflation in March.

While Ramadhan consumption has yet to peak, the price of chili doubled this week to Rp 41,609 per kilogram (kg), while shallots climbed up 29 percent to Rp 41,704 per kg, according to ministry reports.

Deputy Trade Minister Bayu Krisnamurthi said that as of July, the ministry had issued more permits to import shallots and chili, with an allocation of 16,781 tons and 9,715 tons respectively.

'€œDuring the harvest season, we will ensure shipments are stopped. Imports only address shortages,'€ he said.

Analysts have predicted that in the upcoming months, inflation may reach its height, mostly due to food prices that commonly spiral ahead of the Idul Fitri festivities.

Consumer price index rose by 1.03 percent in June, bringing year-on-year inflation to its highest level in three months of 5.9 percent, due to the fuel price increase introduced by the government.

BI has indicated that it foresees inflation going as high as 7.9 percent this year.

Rising inflation will undermine purchasing power, especially for those on fixed salaries.

As Indonesia'€™s economic growth is mostly driven by domestic consumption, sluggish purchasing power, plus the projected drop in investment and weakening exports, will curtail economic growth.

Growth already dropped to 6.02 percent in the first quarter from 6.11 percent in the same period last year.

In a situation such as this, many people could lose their jobs, especially those who work in high-cost industries that have to cut operating costs to survive a more competitive market.

Unusual food price behavior has also been recorded in other major cities. (asw)

Arya Dipa from Bandung contributed to this story.