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n uncertain global economy has put pressure on Indonesia’s economy, as the yearly inflation rate grew in August for the first time since January over surging gold prices, while export growth slowed due to sliding global demand.

Last month, investors worldwide sold risky assets and shifted to safe havens amid mounting worries of a global economic slowdown, pushing up gold prices by 12.3 percent during August to break the historic US$1,900 per troy ounce price level.

Central Statistics Agency (BPS) chairman Rusman Heriawan said on Monday that massive spending on gold had driven up gold’s contribution to August’s headline inflation rate by 20 percent.

Headline inflation reached 0.93 percent during the month, and the year-on-year consumer prices index (CPI) picked up 4.79 percent during Ramadhan, the time of year when consumption is typically at its peak as over 200 million people observe the fasting month.

Core inflation — the primary measurement of the country’s inflation rate, which includes gold but excludes volatile food and government-controlled prices — accelerated faster than headline inflation to 5.15 percent, well above Bank Indonesia’s 5 percent threshold.

“Core inflation will stay at above 5 percent in September because gold prices are trending up,” Rusman told reporters after a news conference at his office.

The increases in headline and core inflation should be a seasonal concern and are not developments that need to be responded to with monetary policy tightening, according to economists.

“The increase in core inflation is not across the board. The impact of the gold prices increase is small, as gold is not a primary or secondary need for the people,” Eric Sugandi, an economist at Standard Chartered Bank Indonesia, told The Jakarta Post over the phone.

The central bank’s six-member board of governors will meet on Thursday to determine a move on Bank Indonesia’s (BI) 6.75 percent benchmark rate.

Bank Mandiri chief economist Destry Damayanti said BI should let the rupiah strengthen to provide cheaper imported products and calm inflationary pressures.

“In August, there was no help from lower import prices to offset the surge in gold prices,” Destry told the Post in a telephone interview. The rupiah depreciated 1.1 percent in August after appreciating 5.8 percent in the previous seven months of this year.

A stronger rupiah, which closed at Rp 8,539 against the greenback on Monday, has helped lower prices of imported products, resulting in an import boom that may hurt Indonesia’s net exports, a contributor to the country’s economic growth.

Rusman announced that the surplus in the nation’s trade balance fell to $1.36 billion in July, its lowest level so far this year, halving June’s surplus of more than $3 billion. “The trade surplus narrows as exports slide and imports surge,” he added

Exports slowed 5.23 percent in July as compared to June, reaching $17.43 billion, while imports grew 6.57 percent to $16.06 billion.

Rusman attributed the decrease in exports to a $1.1 billion decline in crude palm oil (CPO) exports and slowing demand from Indonesia’s second- and third-largest export destinations: the US and Japan.

Cumulatively, year-on-year exports’ 36.51 growth was still faster than the 31.87 percent in import growth during the January-July period.

Export value reached $116.04 billion in the first seven months of this year, on track to meet the Trade Ministry’s $200 billion target, while imports topped $99.64 billion.

BI governor Darmin Nasution said increasing fuel imports and a slight slowdown in global demand may continue to pressure the nation’s current account — which includes trade balance — to book deficits starting in the fourth quarter of this year. “The fluctuation in the current account will be greater.”

“If the current account books a deficit, we will need capital inflows” to maintain a surplus in the nation’s balance of payment to build up the central bank’s foreign exchange reserves, he added.