July inflation below one percent: Economist

July inflation below one percent: Economist

Illustration of food as commodity inflation determinants. (ANTARA/Wahyu Putro A.)

As food price is under control, inflation probably will remain below one percent."
Cirebon, West Java (ANTARA News) - The Head of Bank Mandiri Economists, Destry Damayanti, has predicted that inflation rate in July will remain below one percent, with 0.75 percent (month-to-month) and the yearly inflation 4.6 percent (year-on-year).

Destry said inflation was annually impacted by price hike during fasting month Ramadhan and Eid Holidays, but it was well-controlled this year.

Market demands had also increased as a result of school year and presidential momentum in 2014.

"I believe the government has been successful enough in controlling price hike, especially food," Destry noted.

Destry pointed out that the collapse of Comal Bridge in Pemalang District, Central Java, had caused the logistic cost increase, which has had an impact on price hike.

"That is not significant however, as the government has provided a quick response to stabilize market price," she said.

The low inflation in July, Destry added, was also triggered by gold price drop.

The gold bar price of PT Aneka Tambang, a state-owned mining company, in few days ahead of Eid dropped from Rp529 thousand to Rp528 thousand per gram, as well as its buyback, which was Rp468 thousand per gram, Rp1,000 lower than the same period last year.

Destry added that the strengthened rate of rupiah to US dollar had also curbed inflation in July.

"We have been helped by rupiah appreciation throughout July," she said.

However, the second time increase of electricity fare for industries in early July, Destry noted, might cause an increase in inflation.

"As food price is under control, inflation probably will remain below one percent," she said.

The inflation rate in June 2014 was 0.43 percent compared with the Eid Holidays in previous years, which had always been up to one percent, but this years inflation is low.

The inflation on the Eid Holidays in August 2013, for example, had reached 1.12 percent.

(Reported by Indra Arief Pribadi/translated and edited by Azi Fitriyanti/INE/KR-BSR/A014)

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