Indonesia’s July Inflation Accelerates on Higher Food Prices
Indonesia’s inflation quickened for a second month in July, limiting scope for the central bank to join its neighbors in lowering interest rates even as declining exports threaten growth.
Consumer prices rose 4.56 percent from a year earlier, after climbing 4.53 percent in June, the statistics bureau said in Jakarta today. The median forecast of 23 economists in a Bloomberg News survey was for a 4.59 percent gain. Inflation was mainly held up by increasing food costs, the bureau said.
Bank Indonesia has held off from adding to a February rate cut, seeking to support a currency that has fallen about 4 percent in 2012. Policy makers from China to the Philippines lowered rates last month, a move BI governor Darmin Nasution may avoid amid the risk of price pressures as the world’s largest Muslim population observes the fasting period of Ramadan and the Idul Fitri festival that marks its end.
“Headline inflation climbed on higher food and processed food prices, driven in part by the start of the fasting month,” Chua Hak Bin, a Singapore-based economist at Bank of America, said before the release. “A weaker rupiah may have also added to inflation pressures.”
The rupiah fell 0.3 percent to 9,468 per dollar as of 11:21 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg.
Bank Indonesia held its benchmark reference rate at a record-low 5.75 percent last month. The central bank said at its July 12 meeting the crisis in Europe and growing imports had put pressure on the rupiah, adding it will develop foreign-exchange monetary instruments to support stabilization of the currency to ensure it reflects fundamentals and is in line with regional counterparts.
Consumer prices rose 0.7 percent last month from June, today’s report showed. The core inflation rate was 4.28 percent, compared with a previously reported 4.15 percent pace in June.
Exports in June fell 16.4 percent from a year earlier, the statistics bureau said. Imports rose 10.7 percent. Indonesia’s trade deficit in June was $1.32 billion.