Indonesia Inflation Rate Holds Near Highest Since May
Indonesia’s inflation held near the fastest pace since May 2009 amid rising commodity and food prices, putting pressure on the central bank to raise interest rates this year.
The consumer price index rose 3.81 percent in February from a year earlier, the central statistics agency said in Jakarta today. That compares with the 3.97 percent median estimate of 20 economists in a Bloomberg News survey.
“We have seen commodity prices start to pick up in February, putting pressure on inflation,” Winang Budoyo, an economist at Jakarta-based PT Bank CIMB Niaga, said before the report. The prospect of faster price gains may force the central bank to raise its policy rate to 6.75 percent in the coming months, he said.
Bank Indonesia, which meets on March 4 to review its policy, has kept the benchmark interest rate at 6.5 percent since August, following nine cuts that have helped Southeast Asia’s biggest economy avoid a recession. Faster inflation has prompted some Asian policy makers to start exiting monetary stimulus as the region leads the world out of its economic slump.
Indonesia’s central bank will probably maintain its benchmark interest rate at a record-low 6.5 percent this week, according to all 21 economists in a Bloomberg News survey. Still, borrowing costs may rise by the third quarter, a survey of 12 economists showed easy payday loans.
Palm Oil, Rice
In neighboring Malaysia, which will also hold a policy meeting on March 4, five out of 16 economists surveyed expect Governor Zeti Akhtar Aziz to raise the overnight rate to 2.25 percent from 2 percent.
Palm oil for May delivery rose 1 percent to 2,624 ringgit ($774) a metric ton on the Malaysia Derivatives Exchange as of 10:23 a.m. Jakarta time today. Prices for the edible oil have risen 37 percent in the past year. The cost of rice, the staple for Indonesia’s 230 million people, rose 4 percent to 8,100 rupiah ($0.87 ) a kilogram in February from the end of December, according to data from PT Food Station Tjipinang Jaya, Indonesia’s biggest market for the grain.
Indonesian consumer prices rose 0.3 percent in February from the previous month after gaining 0.84 percent in January.
Indonesia’s exports, which account for about 29 percent of the country’s gross domestic product, rose 59 percent to $11.57 billion in January from a year earlier after gaining 49.8 percent in the previous month.
Filed under: technology by Finance Boss