[Kabar-indonesia] update: Indonesia's July CPI up 15.15 pct yr/yr

[JoyoNews at aol.com]

Indonesia's July CPI up 15.15 pct yr/yr

JAKARTA, Aug 1 (Reuters) - Indonesia's annual inflation rate fell in July to 
15.15 percent as the pace of increases in food prices slowed, data showed 
on Tuesday, suggesting more scope for interest rate cuts to boost a flagging 
economy.

The annual rise in the consumer price index was lower than market 
expectations 
for an increase of 15.4 percent. It compared with an annual gain of 15.5 
percent 
in June and 15.4 percent in April.

Prices of raw food, which account for a quarter of the consumer price index, 
rose 
at an annual rate of just 15.77 percent in July, well below the previous 
month's 
17 percent.

The statistics bureau also said annual core inflation, used by the central 
bank, 
Bank Indonesia (BI), as a guide for its monetary policy, was 9.58 percent in 
July, 
the same as the previous month.

"The room for BI to cut the interest rate is wide open now. Thanks to lower 
inflation, 
a stable rupiah and signals for an (interest rate hike) pause from the U.S. 
Fed," 
said economist Roy Bahren of Bank Niaga.

The largely expected economic data did not have any major market impact. 
The rupiah was trading at 9,080 to the dollar compared with around 9,085 
before the data was released.

The main stock index was up 0.84 percent after the data was announced, 
compared with an increase of around 0.85 percent before the data was 
announced.

The statistics bureau also said Indonesia's exports in June rose 23.08 
percent from 
a year earlier to $8.48 billion, compared to analysts estimates for an 18.41 
percent increase, partly due to strong exports of commodities such as palm oil 
products.

Imports rose in June an annual 17.6 percent to $5.67 billion, compared to 
analysts' estimates of a 6.9 percent increase.

That left a trade surplus of $2.81 billion, against a market forecast for a 
surplus of $3.01 billion.

"It (the July fall) had been expected. If there are no major shocking factors 
that 
cause prices to rise in the coming months, I expect inflation to reach single 
digits 
at the end of the year," said economist Anung Roni of brokerage AAA Sekuritas.

"I think the time is good for BI to cut interest rates now."

The central bank has said that its key BI target rate of 12.25 percent can 
come 
down in the second half of the year if inflation eases.

It has already cut the rate by 25 basis points in May and July and it next 
reviews policy on Aug. 8.

Inflation in Southeast Asia's biggest economy climbed to a six-year high of 
18.4 percent in November after a sharp rise in fuel prices. It is still among 
the highest 
in Asia.

It raised rates to 12.75 percent from 8.5 percent in the second half of last 
year to support an ailing rupiah and offset a sharp rise in inflation.

High interest rates have taken a toll on the economy. GDP rose in the first 
quarter
by 4.6 percent from a year earlier, its weakest annual pace since 2004.

In a revised budget proposal, the government has projected economic growth 
this year of 5.9 percent, down from 6.2 percent originally, but still higher 
than last 
year's growth of 5.6 percent. 

------------------------------------------
Joyo Indonesia News Service
------------------------------------------