[Kabar-indonesia] WSJ update: Indonesia's Rate Of Inflation Eased In September

[JoyoNews at aol.com]

The Wall Street Journal
Tuesday, October 3, 2006

Indonesia's Rate Of Inflation Eased In September

By FARIDA HUSNA and I MADE SENTANA

JAKARTA, Indonesia -- The Indonesian inflation rate eased slightly in 
September, reinforcing expectations that the central bank will cut its benchmark 
interest rate by a quarter to a half percentage point when its board of governors 
meets Thursday.

The consumer-price index rose 14.55% in September from a year earlier, slower 
than August's 14.9% rise, the official Central Statistics Agency said. The 
index rose 0.38% from the previous month following a 0.33% month-to-month 
increase in August.

The year-to-year inflation number "is good enough to keep the authorities on 
track" for another half-percentage-point rate cut Thursday, ING Chief Asia 
Economist Tim Condon said.

Ahead of the data, analysts had expected Bank Indonesia to continue its 
monetary-policy easing despite a possible rise in inflation linked to the Islamic 
fasting month of Ramadan, which began in the last week of September. Although 
Ramadan requires observant Muslims to refrain from eating and drinking from 
dawn to dusk, Indonesians break the daily fast with banquets that boost 
consumption during the month.

Bank Indonesia also indicated last week that any Ramadan-related inflation 
surge wouldn't derail its monetary-policy loosening, which is aimed at speeding 
up economic growth.

"Even though [month-to-month] inflation in September may be higher on 
seasonal factors like the fasting month, I don't think it will be significant ... so 
our plans to continue to cut the interest rate [in October] are still open," 
Bank Indonesia Deputy Gov. Aslim Tadjuddin said.

Meanwhile, Indonesia's trade surplus narrowed to $3.27 billion in August from 
$3.44 billion in July amid a 4.5% rise in imports to $5.62 billion. Exports 
rose 0.08% to a record $8.89 billion because of rising prices of commodities 
including rubber, crude palm oil and copper.

--Phelim Kyne contributed to this article

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Joyo Indonesia News Service
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