September's Inflation Rate Still Under Control: Bank Indonesia

Jakarta (Antara Bali) - The inflation in September 2014 is still under control despite the price hike of the 12-kilogram liquid petroleum gas (LPG) from Rp92.8 thousand to Rp114.3 thousand per cylinder, stated Bank Indonesia (BI).

"Bank Indonesia (BI) has taken into consideration the economic indicators in September, so we can say that it is still under control. Hopefully, the inflation can be lower than August," BI Senior Deputy Governor Mirza Adityaswara informed the press after a work meeting with the Budgeting Agency of People Representatives Council (DPR) here on Monday night (Sept. 22).

The inflation in August 2014 reached 0.47 percent (month-to-month), lower than July's inflation recorded at 0.93 percent, which was affected by the post-Eid correction in food prices and transportation fares.

With regard to September's inflation, Mirza explained that the price hike of the 12-kilogram LPG cylinder indeed affected the inflation, but it was relatively small and still in accordance with BI's objectives.

Mirza revealed that he was more concerned about the inflation risks arising from the possibility of a hike in the prices of subsidized fuel oils during the fourth quarter of 2014, which can have a huge impact on the inflation rate.

"Whether it (the price hike of subsidized oil fuel) will happen in November, December, or in early next year, but it is probably going to have an impact on the inflation," he remarked.

The BI has forecast that every Rp one thousand per liter hike in the price of subsidized fuel oils might raise the inflation to 1.1 to 1.2 percent, while if the price is raised Rp two thousand per liter, it will cause 2.2 to 2.4 percent hike in the inflation.

"If the hike is Rp three thousand per liter, then the inflation will be 3.3 to 3.5 percent," Mirza noted.

Mirza asserted that during the last few months, BI had been able to control the inflation, and hence, he was convinced that the inflation throughout 2014 will be in the range of 4.5 percent, give or take 1 percent, as targeted by the central bank.

"It will not be beyond 5.5 percent, but please note that it does not factor in the impact of the fuel oil price hike," he added. (WDY)