Rise in food prices pushes up inflation rate

JAKARTA. The monthly inflation rate rose in January as heavy rains in some parts of the country have contributed to an increase in food prices.

The Central Statistics Agency (BPS) reported on Wednesday that the monthly consumer price index (CPI) in January rose to 0.76 percent, higher than the 0.57 percent recorded in December on the back of food price increases during the month.

“Inflation surged due to increases in the prices of several food commodities,” BPS interim head Suryamin said on Wednesday. The year-on-year inflation, however, slowed to 3.65 percent in January from 3.79 percent in December.

Coordinating Economic Minister Hatta Rajasa acknowledged that the surge in prices was mainly due to some floods in the country, but he said that the inflation pressure would ease in the coming months.

But analysts warned that the upward trend in inflation would continue in the coming months as rainy seasons in some parts of the country might further cause flooding which would in turn bring up food prices.

They said that if the government went ahead with its plan to increase electricity prices in April and raise subsidized fuel prices, the annual inflation could surpass the government’s target of between 4 and 5.3 percent this year.

Indonesian Institute of Sciences (LIPI) economist Latif Adam said that the inflation in January was quite high mainly due to the rise in food prices.

“Other than the food price index, import depreciation also affected the rising inflation,” he said, adding that the weakening of the rupiah last month also contributed to the increase in prices of imported products. “Most of our manufacturing companies still rely on imported raw materials,” he added.

Latif added that people could also expect inflation to climb constantly until April.

“The government has at least set up three plans [to be implemented by the end of April] that could trigger a rise in inflation and they are the fuel policy plan, the plan to raise electricity tariffs and the plan to raise fertilizer prices,” he said.

“After April, the pressure from the food price index might ease because harvesting season will start from the end of February until March. However, we must not forget the other factors. Inflation rates after April will depend on the government’s choices on their planned policies,” he added. (Hans David Tampubolon/The Jakarta Post)