RI'S 2008 Inflation to Reach 12.2 Percent

Jakarta - Indonesia's full-year inflation rate in 2008 is expected to reach 12.2 percent as the on-month inflation rate in August stood at 0.51 percent, an economist said.

"The governmment will find it very hard to achieve its inflation rate target of 11.4 percent set for this year. I predict the inflation rate would reach 12.2 percent in view of the current favorable economic developments," Ichsanuddin Noorsy of the Indonesia Awakening Team said here on Monday.

The Central Bureau of Statistics (BPS) said earlier in the day Indonesia's monthly inflation rate in August 2008 reached 0.51 percent, bringing the calendar inflation rate to 9.4 percent and the on-year inflation rate to 11.85 percent.

The August 2008 inflation was mainly the result of a 0.94 percent rise in the prices of foodstuffs and a 1.36 percent increase in the prices of services in the education, recreation and sports sectors, BPS Chief Rusman Heriawan said.

"The BPS did not record any increase in transport fares in August," he said.

The agency noted a rise in the prices of a number of commodities including fresh fish, chicken meat, eggs, and liquefied petroleum gas (LPG) as well as an increase in senior high school tuition fees contributed a lot to the August 2008 inflation.

"Although the rise in the prices of LPG was postponed it had contributed to the August 2008 inflation rate. The rise in senior high school tuition fees followed an increase in elementary and junior high school tuition fees a month earlier," he said.

The BPS chief said the prices of a number of commodities including gold, onion, chili, Pertamax gasoline and cooking oil fell in August.

Ichsanuddin said the inflation remained a "disease" because of uncertainty in the global economy.

"The uncertainty is expected to continue until the first semester of 2009 and the prices of commodities will remain volatile," he said.

The other indication was the persistent steep rise in the prices of materials for infrastructure projects at home, he said.

"Meanwhile at the same time the prices of food commodities have shown no sign of stability," he added.

The newly-announced rise in the prices of liquefied petroleum gas would drive up the prices of other goods, putting a further strain on the inflation rate, he said. "The multiplier effect of the rise in the prices of LPG will continue," he said.