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Electricity tariffs, vehicle registration fees to push January inflation: BI
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A Bank Indonesia employee leaves the central bank's building in Central Jakarta. (Tempo/-)
B
ank Indonesia (BI) predicts that inflation in January will be dragged up by increases in administered prices, namely electricity tariffs and fees for vehicle registration (STNK). These hikes have been introduced by the government to adjust to subsidy allocation and increase non-tax revenues.
With such measures, the central bank projects monthly inflation in January will reach 0.69 percent, slightly higher than its earlier projection of 0.67 percent, although it is still below the psychological level of 1 percent for monthly inflation.
“[January inflation] will be slightly higher due to adjustments in electricity costs for 900 volt-ampere [VA] and vehicle registration fees,” BI executive director for economic and monetary policy Juda Agung said on Friday.
(Read also: Indonesia 2016 full-year inflation at 3.02% as prices stable)
Juda said increases in vehicle registration fees and electricity tariffs would contribute about 0.24 percent and 0.1 percent to the monthly inflation rate in January, respectively.
The effects of the hike in electricity costs for 900 VA are still relatively limited as the hike applies to prepaid types, while the postpaid will only be applied next month, he added.
In 2016, full-year inflation stood at 3.02 percent – the lowest level since 2009 – thanks to low commodity prices and relatively weak sentiment.
The central bank projects inflation to hover between the target range of 3 percent and 5 percent this year, with the figure in 2018 projected to be around 3.5 percent to 4.5 percent. For 2020 and 2021, BI and the government forecast that inflation will hover between 2 percent and 4 percent.
