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BI warns of inflation risks due to La Ninã
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Bank Indonesia governor Agus Martowardojo speaks as Federal Reserve Bank of New York president William Dudley listens during a press conference on the Executives’ Meeting of Asia Pacific Central Banks (EMEAP) in Bali on Aug. 1. (Courtesy of Bank Indonesia/-)
B
ank Indonesia (BI) governor Agus Martowardojo has urged the government to anticipate inflation risks stemming from the La Ninã weather anomaly, which is set to bring heavy rain throughout the year and threaten primary commodity supplies.
"There will be inflation risks from food commodity disruptions caused by La Ninã, which, according to the BMKG, will last from July to December. This will cause prices of horticultural products, such as chillies, onions and rice, to inflate," Agus said at a national coordination meeting on inflation in Jakarta on Thursday.
To address this risk, Agus said, the central bank had launched integrated efforts with related ministries and local administrations, such as providing assistance for shallot farmers in eight regencies in Central Java. The first harvest was expected to occur in October, producing around 300 tons of shallots.
(Read also : July's inflation lowest in five years: BPS)
"To maintain the inflation rate in 2016, 2017 and 2018 in line with our target of 4 percent in 2016, 4.1 percent in 2017 and 3.5 percent in 2018, this risk must be one of our concerns," he went on.
However, Agus added that Indonesia’s inflation rate had been on a declining trend in the first seven months of 2016.
In its latest reports, the Central Statistics Agency recorded monthly inflation in June and July at low levels of 0.66 percent and 0.69 percent, respectively, despite Ramadhan and Idul Fitri falling in that period.
"According to our records, these are the lowest inflation rates in the last five years. This [low inflation] occurred in almost all regions," the governor said. The government’s increase in staple food supplies during Ramadhan and Idul Fitri had succeeded in curbing inflationary pressure, he went on. (ebf)
