[Kabar-indonesia] 6 reports: Indonesia August Inflation Down, Rate Cut Seen [+Citigroup]

[JoyoNews at aol.com]

6 Articles:

- Indonesia August CPI +0.33% On Month; 
  Economists Expected +0.36%

- Data View: Indonesia Inflation Fall
  Cements Rate Cut View

- Indonesia's August inflation down,
  rate cut seen

- Datawatch - Indonesia's lower Aug 
  CPI also reflects weakening buying 
  power - BRI

- Datawatch- Indonesia July trade 
  data points to wider base for 
  goods - Mandiri

- Datawatch - Indonesia August 
  CPI better-than expected - Citigroup

Indonesia August CPI +0.33% On Month; 
Economists Expected +0.36%

JAKARTA,  September 1 (Dow Jones)--Indonesia's consumer price index
climbed at a slower-than-expected pace of 14.90% on year in August,
the official Central Statistics Agency said Friday.

On month, the inflation rate was 0.33%, agency chairman Rusman
Heriawan told reporters at a press briefing.

In July, inflation was 15.15% on year and 0.45% on month.

Heriawan said that the August result was the first time this year that
inflation had fallen below the 15.0% level. Rising education costs at
the start of the new school year was one of the main drivers behind
August's inflation, he said.

Core inflation - which excludes prices that are controlled by the
government, such as energy and food - was 9.68%, an acceleration 
from 9.58% in July.

August inflation was slightly below the average forecast of seven
regional economists of 14.92% on year. They expected on-month
inflation of 0.36%. 

Last month's inflationary easing and official forecasts of a further
slowing in price rises through the end of 2006 will heighten market
anticipation that Bank Indonesia will cut its benchmark one-month rate
next week.

The central bank has forecast that inflation will ease to 7.0%-8.0% on
year by the end of December, and analysts expect the benchmark rate -
now at 11.75% - to decline to around 10.50% by then.

Bank Indonesia's Board of Governors will decide on possible rate
changes at its regular monthly meeting Tuesday.

August 2006 On-Month Inflation By Sector

Housing and energy                                    +0.30%
Food                                                          -0.34%
Processed food, beverages and cigarettes    +0.35%
Health                                                       +0.33%
Education                                                  +4.77%
Clothing                                                     +0.35%
Transportation and communications             +0.01%


--------------------------------------------------------

Data View: Indonesia Inflation Fall Cements Rate Cut View

JAKARTA, September 1 (Dow Jones)--Indonesia's inflation rate eased
slightly in July, cementing expectations that the country's central
bank will cut its benchmark interest rate by 50 basis points when it
meets Tuesday.

The consumer price index rose 14.90% in August from a year earlier,
which was slower than a 15.15% rise in July, the Central Statistics
Agency said Friday.

The CPI rose 0.33% from the previous month following a 0.45% on-month
increase in July.

Ahead of the data, analysts had expected Bank Indonesia to loosen
monetary policy to jump start economic growth, which had suffered
under high interest rates.But the inflation data adds weight to
forecasts that the central bank will maintain its accelerated pace of
policy easing.

They expect the central bank to cut the benchmark one-month rate by 50
basis points to 11.25%, following cuts of 50 basis points in August
and 25-basis-point cuts in May and July.

"I think the (August) inflation data paves the way for
another50-basis-point rate cut next Tuesday," said ING Chief Asia
Economist Tim Condon.

Lower benchmark rates will boost consumer lending and purchasing
power, Condon said. He expects the benchmark Bank Indonesia rate to
fall "close to 10.00%" by end-2006.

Condon isn't alone. Analysts on average expect the benchmark Bank
Indonesia rate to fall to around 10.50% by the end of 2006 in tandem
with a reduction in on-year inflation to 7.00%-8.0% in the same time
period.

Another 50 basis points rate cut next week is sorely-needed to
stimulate economic growth, said Sin Beng Ong, JPMorgan economist.

"It is justified if you look at the economy because even though things
have stabilized, there hasn't been a significant pickup in growth,"
Ong said.

August's relatively benign data may even prompt the central bank to
"more aggressively" accelerate policy easing with a 75-basis-point
rate cut, Merrill Lynch said in a report Friday.

"Factors that warrant such an aggressive move (include) continued
(falling) inflation and trade data, along with a stable exchange
rate...(and) the domestic economy is crying out for a much-needed
boost," Merrill Lynch said.

Monetary Policy Crucial As Fiscal Spending Stagnates

Indonesia's policy-makers are relying on monetary policy to deliver
economic growth stimulus to help offset the impact of stagnating
fiscal spending in 2006.

"The government is spending far too slowly," Emir Moeis, an opposition
lawmaker and chief of Parliament's budget committee, said Thursday.
"So far in 2006, less than 23% of the government's development budget
has been spent."

Minister of National Development Planning Paskah Suzeta said last
month that government efforts to increase the transparency of fiscal
operations means a total of IDR6 trillion-IDR7 trillion in planned
fiscal spending for 2006 will likely go unspent.

Indonesia's government of President Susilo Bambang Yudhoyono has
forecast a 6.2% rise in gross domestic growth for full-year 2006,
outpacing the 5.6% expansion last year.

But Indonesia recorded only a 4.97% on-year expansion in the first six
months of 2006, indicating that the government must intensify economic
growth stimulus measures to reach the official target.

"It would be great if we had both fiscal and monetary policy working
together toward supporting growth," said Lim Su Sian, Southeast Asia
economist for DBS Bank. "The problem they're facing is (spending)
execution and that is a problem with local governments."

August's core inflation, which excludes prices controlled by the
government, was 9.68%, up from 9.58% in July.

Year-on-year inflation was slightly below expectations, which centered
on a rise of 14.92%. Forecasts for on-month inflation centered on
0.36%.

Other official data issued Friday show that Indonesia's tradesurplus
widened to $3.44 billion in July from $2.81 billion in June The trade
surplus rose due to a 4% rise in exports to a record $8.82 billion in
July from $8.48 billion in June.

Imports fell 5.1% to $5.38 billion in July from $5.67 billion the
previous month due to lower imports of crude oil. The value of
imported petroleum products rose 33.0% to $1.88 billion in July from
$1.41 billion.

The temporary shutdown of two refineries in central Sumatra has
spurred higher imports of petroleum products, analysts said.

The trade surplus compares with $2.17 billion in July of 2005.

"Trade performance regionally has been surprising, but Indonesia has
been more patchy in its performance...so I'm not sure I'll put my hand
in the fire and say it will be sustained," said ING's Condon.

Indonesia's total trade surplus in the January-July period was $21.52
billion, 48.0% higher than during the same period last year

--------------------------------------------------------------

Indonesia's August inflation down,rate cut seen

JAKARTA, September 1 (Reuters) - Indonesia's annual inflation rate
fell in August as the effect of last year's big fuel price rise faded
and food costs stabilised, government data showed on Friday, opening
the door for more interest rate cuts.

The consumer price index in August rose 14.9 percent from a year
earlier, below market expectations for an increase of 14.99 percent
and slowing from an annual rise in July of 15.15 percent.

The inflation rate has generally fallen since last November, when it
hit a six-year high of 18.4 percent after the government sharply
raised domestic fuel prices.

"The data paves the way for BI to embark on an 'aggressive' rate cut
of 50 basis points next week which will pare the 1-month policy rate
to 11.25 percent," said Patricia Lui, Managing Analyst Emerging Asia
at financial analysis firm Informa Globalmarkets in Singapore.

"The central bank will continue to take every opportunity to embark on
hefty rate cuts lest the external situation turns less favourable
later in the year, especially oil prices," Lui said.

The data came ahead of a central bank interest rate review next Tuesday.

The statistics bureau also said the annual rate of core inflation,
which excludes volatile items such as food, rose to 9.68 percent in
August from 9.58 percent in July.

The rupiah <IDR=> was trading at 9,088 to the dollar compared with
around 9,090 before the data was released.

The Jakarta Composite Index <.JKSE> was up 0.46 percent at 0730 GMT,
compared with a rise of around 0.45 percent before the data was
announced.

The statistics bureau also said Indonesia's exports in July rose 23.4
percent from a year earlier to $8.82 billion, above expectations of a
19.88 percent increase, partly due to strong demand for the country's
commodities.

Imports rose in July by an annual 7.82 percent to $5.38 billion, lower
than market expectations of a rise of 9.7 percent.

The country had a July trade surplus of $3.44 billion, higher than a
forecast of $2.85 billion and compared with a surplus in July 2005 of
$2.17 billion.

"July trade data continued (to post) healthy growth, in line with the
pattern across the region. Exports growing at over 23 percent
year-on-year actually beat most people's forecasts, for a record trade
surplus," said economist David Cohen of Action Economics in Singapore.

Inflation jumped last November after the government cut fuel subsidies
and cranked up prices in October, which dampened economic growth in
the country of 220 million.

Inflation has since eased, allowing Bank Indonesia to cut benchmark rates.

It cut its benchmark interest rate <BIPG> by half a point to 11.75
percent in August, the third cut this year, after raising it to 12.75
percent from 8.5 percent in the second half of 2005 to fight inflation
and prop up the rupiah.

But with the impact of the fuel price rises fading, the central bank
has said the rate could fall to between 10 and 11 percent by the end
of the year. It expects annual inflation to fall to around 8 percent.
(Additional reporting by Muhamad Ari and Johannes Mantiri)

----------------------------------------------------------------

Datawatch - Indonesia's lower Aug CPI also reflects weakening buying power - 
BRI

JAKARTA (XFN-ASIA) - The inflation rate in August turned out to be
lower than expected, helping build confidence in the economy, but the
figure also indicates a declining consumer spending power, Djoko
Retnadi, an economist with Bank Rakyat Indonesia (BRI) said.

The government reported CPI in August was up 0.33 pct month-on-month
and rose 14.9 pct year-on-year. In July, CPI rose 0.45 pct
month-on-month and was up 15.15 pct year-on-year.

"The lower inflation figure also indicates a decline in consumer
spending. This should alarm the government," Retnadi said.

The drop in car sales during the first half against a year earlier
also reflects a fall in consumer spending power, he said.

He noted the drop in the BI rate, saying it is likely to be followed
by a decline in banks' deposit rates and loans to consumer-related
sectors such as cars and housing.

He said banks' loans to the manufacturing or industrial sectors may
only begin to improve in the fourth quarter of 2006 or the first
quarter of next year.

Given that, the government should implement policies to encouarge
economic activity in the country, which subsequently should raise
consumers' income and boost their spending power, Retnadi said.

----------------------------------------------------------------------

Datawatch- Indonesia July trade data points to wider base for goods - Mandiri

JAKARTA, September 1 (XFN-ASIA) - The record exports figure in July
points to a broadening base of demand for the country's goods, with
indications of an increasing pick up in sales to China and Europe,
Mandiri Securities economist Destry Damayanti believes.

'Apart from high commodity prices, the broader base of global demand
is key to the exports record,' she said.

Data released earlier showed exports hitting a fresh record monthly
high of 8.82 bln usd in July from 8.48 bln in June. Imports meanwhile
fell to 5.38 bln usd from 5.67 bln usd in June. As a result the trade
surplus grew to 3.44 bln usd from 2.81 bln usd in June.

Damayanti noted that the latest data showed a drop in non-oil and gas
exports to Indonesia's three largest trading partners US, Japan and
Singapore.

At the same time non-oil and gas exports to China, the fourth largest
export destination, rose to 525.8 mln from 453.9 mln in June. China is
also a major importer of oil and gas from Indonesia.

Damayanti said external demand prospects for Indonesia goods for the
rest of the year look robust expect from the US.

While the overall picture look rosy, she noted that a strong weakening
of imports over coming months could eventually fee through into more
subdued export figures, notwithstanding the good global situation.

----------------------------------------------------------------------

Datawatch - Indonesia August CPI better-than expected - Citigroup

JAKARTA, September 1 (XFN-ASIA) - The August inflation rate was
better-than-expected, with a fall in food prices surprising the
market, Citigroup economist Anton Gunawan said.

CPI was up 0.33 pct month-on-month and 14.9 pct year-on-year. In July
CPI rose 15.15 pct year-on-year and was up 0.45 pct month-on-month.

"The price rises in education as well as in recreation and sports were
largely expected. However, what was quite surprising, and also
strange, was the fall in food prices," Gunawan said.

Government data showed the month-on-month gain in prices was led by
increased costs for education, recreation and sports. But food prices
softened, falling 0.34 pct from the previous month. which helped trim
the overall CPI rate from the July level.

Analysts polled by XFN Asia had predicted August CPI to have risen 14.
7-15.27 pct year-on-year and 0.2-0.65 pct from the previous month.

Gunawan said he expect a modest increase in food prices in August but
not a fall.

Based on the latest data, the central bank's expectation for full year
CPI of 7-8 pct should be "achievable," he said.

He is picking full year CPI growth of 7.8 pct.

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