"According to BI`s predictions inflation in 2012 and 2013 will remain low as there is a tendency of the price of world commodities outside oil to go down around 12.48 percent in 2012," the director of the central bank`s Directorate of Economic Research and Monetary Policy, Ferry Warjiyo, here on Tuesday.
He said inflation until the end of 2012 without administered price would be at 3.96 percent.
Meanwhile if the government finally decided to increase the electricity price by 10 percent inflation would rise by 0.2 percent and if the price of rice rises it will increase inflation by 0.1 percent.
If the government finally issued a policy to limit oil consumption Perry said it would increase inflation by 0.7 percent.
"Meanwhile if the government decides to raise the price of gasoline by Rp500 the impact on inflation would be a rise by around 0.3 percent," he said.
All inflation increases caused by administered price if they are finally taken by the government however would not as yet be outside the targeted range of 3.5 and 5.5 percent in 2012 to 2013, he said.
Based on the low inflation expectations BI therefore had the courage to lower the BI Rate to 5.75 percent with a view to helping promote national economic growth which is expected to slow down due to the impact of the European financial crisis.
"National economic growth is predicted to lead to the low part of the range between 6.3 and 6.7 percent. Unless there are fiscal and monetary policies economic growth in 2012 is predicted to reach 6.3 percent," he said.
Therefore, BI hopes the drop in the BI Rate would be followed by a decline in the rate of banking credits that would give stimulus to national economic growth. (*)
Editor: Heru Purwanto
Copyright © ANTARA 2012
