Thursday, November 01, 2012

Indonesian Inflation Quickens as Weakening Currency Boosts Costs


Indonesia’s inflation accelerated to a 13-month high in October as Asia’s worst performing currency this year boosted the cost of imports, reducing the scope for interest-rate cuts to counter falling exports.

Consumer prices climbed 4.61 percent from a year earlier last month, after rising 4.31 percent in September, the statistics bureau said in Jakarta today. The median of 20 estimates in a Bloomberg News survey was for a 4.59 percent gain. Exports fell 9.4 percent in September from a year earlier, the sixth month of declines.

Bank Indonesia has refrained from adding to a February rate cut to prevent further weakening the rupiah, which has dropped more than 5 percent this year in the biggest decline among 11 Asian currencies tracked by Bloomberg. Southeast Asia’s biggest economy has so far withstood the global slowdown amid Europe’s debt crisis, with growth forecast to hold above 6 percent for an eighth quarter in the three months through September.

“The weakening currency has hurt inflation,” Destry Damayanti, chief economist at PT Bank Mandiri in Jakarta, said before the report. “Most likely in November prices will be stable as there’s no pressure from food and transportation. There’s no strong reason for the central bank to change its monetary policy this month.”

The rupiah fell 0.2 percent to 9,630 per dollar as of 10:45 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg.

The exports decline in September followed a previously reported 24.3 percent drop in August. Imports rose 1.2 percent from year earlier.

Consumer prices rose 0.16 percent last month from September, today’s report showed. The core inflation rate was 4.59 percent, compared with a 4.12 percent pace in the month before.-Bloomberg (November 01, 2012 12:18PM)

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