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Inflation will return to normal in February: BI
Bank Indonesia (BI) predicts that the inflation rate will return to normal in February 2015 after it increased following the subsidized-fuel price hike in November
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B
ank Indonesia (BI) predicts that the inflation rate will return to normal in February 2015 after it increased following the subsidized-fuel price hike in November.
'Month-to-month inflation will return to its normal pattern in February 2015,' BI spokesman Hendra said as quoted by Antara news agency in Jakarta on Thursday.
According to Central Statistics Agency (BPS) data, the inflation rate in November was higher than the previous month; however, it was still lower than the central bank had predicted. November's inflation stood at 1.5 percent, up from 0.47 percent in the previous month. Meanwhile, year-on-year inflation stood at 6.23 percent.
The increased inflation in November was primarily triggered by increased inflationary pressures on administered prices and volatile foods. Pressure on administered prices increased primarily because of increases in subsidized-fuel prices, land transportation tariffs and electricity tariffs.
Meanwhile, increase in core inflation was relatively in line with what had been predicted, reaching 0.4 percent (month-to-month) or 4.21 percent (year-on-year). This was triggered by, among other factors, increases in transportation costs in line with the rise in fuel prices.
Hendra admitted that the government's policy of raising fuel prices would push the inflation rate to a higher level; however, the inflation increase was predicted to occur in the three months after the policy took effect on Nov.18.
'It was two week ago that the government increased the subsidized-fuel prices. In the short term, this will push inflation higher, but in the long term, this will have more positive effects such as reducing oil imports. The reallocation of fuel subsidies to infrastructure developments will drive economic growth,' claimed Hendra. (ebf)
