By Aloysius Unditu and Novrida Manurung
March 1 (Bloomberg) -- Indonesia’s inflation accelerated to the fastest pace in nine months amid rising commodity and food prices, putting pressure on the central bank to raise interest rates this year.
“We have seen commodity prices start to pick up in February, putting pressure on inflation,” Winang Budoyo, an economist at Jakarta-based PT Bank CIMB Niaga, said before the report. The prospect of faster price gains may force the central bank to raise its policy rate to 6.75 percent in the coming months, he said.
Bank Indonesia, which meets on March 4 to review its policy, has kept borrowing costs at a record low since August, following nine cuts that have helped Southeast Asia’s biggest economy avoid a recession. Faster inflation has prompted some Asian policy makers to start exiting monetary stimulus as the region leads the world out of its economic slump.
Exports Surge
In neighboring Malaysia, which will also hold a policy meeting on March 4, five out of 16 economists surveyed expect Governor Zeti Akhtar Aziz to raise the overnight rate to 2.25 percent from 2 percent after the government said last week the economy emerged from its recession in the fourth quarter.
Indonesia’s exports, which account for about 29 percent of the country’s gross domestic product, rose 59 percent to $11.57 billion in January from a year earlier after gaining 49.8 percent in the previous month. That’s the biggest jump since at least December 1995, when Bloomberg data started.
The Jakarta Composite index rose 0.4 percent at the 12 p.m. midday break in Jakarta. The rupiah rose 0.7 percent to 9,268 per dollar, the biggest gainer in Asia, according to Bloomberg data. The currency is the best performer in the region this year, excluding Japan.
Imports rose 44.6 percent to $9.54 billion in January from a year earlier after gaining 33.4 percent in the previous month. That left a trade surplus of $2.03 billion.
Indonesian consumer prices rose 0.3 percent in February from the previous month after gaining 0.84 percent in January.
Palm oil for May delivery rose 1 percent to 2,624 ringgit ($774) a metric ton on the Malaysia Derivatives Exchange as of 10:23 a.m. Jakarta time today. Prices for the edible oil have risen 37 percent in the past year. The cost of rice, the staple for Indonesia’s 230 million people, rose 4 percent to 8,100 rupiah ($0.87 ) a kilogram in February from the end of December, according to data from PT Food Station Tjipinang Jaya, Indonesia’s biggest market for the grain.
--With assistance from Michael Munoz in Hong Kong, Berni Moestafa and Yoga Rusmana in Jakarta. Editors: Stephanie Phang, Paul Panckhurst
%IDR
To contact the reporter on this story: Aloysius Unditu in Jakarta at aunditu@bloomberg.net
To contact the editor responsible for this story: Chris Anstey in Tokyo at
March 1 (Bloomberg) -- Indonesia’s inflation accelerated to the fastest pace in nine months amid rising commodity and food prices, putting pressure on the central bank to raise interest rates this year.
“We have seen commodity prices start to pick up in February, putting pressure on inflation,” Winang Budoyo, an economist at Jakarta-based PT Bank CIMB Niaga, said before the report. The prospect of faster price gains may force the central bank to raise its policy rate to 6.75 percent in the coming months, he said.
Bank Indonesia, which meets on March 4 to review its policy, has kept borrowing costs at a record low since August, following nine cuts that have helped Southeast Asia’s biggest economy avoid a recession. Faster inflation has prompted some Asian policy makers to start exiting monetary stimulus as the region leads the world out of its economic slump.
Exports Surge
In neighboring Malaysia, which will also hold a policy meeting on March 4, five out of 16 economists surveyed expect Governor Zeti Akhtar Aziz to raise the overnight rate to 2.25 percent from 2 percent after the government said last week the economy emerged from its recession in the fourth quarter.
Indonesia’s exports, which account for about 29 percent of the country’s gross domestic product, rose 59 percent to $11.57 billion in January from a year earlier after gaining 49.8 percent in the previous month. That’s the biggest jump since at least December 1995, when Bloomberg data started.
The Jakarta Composite index rose 0.4 percent at the 12 p.m. midday break in Jakarta. The rupiah rose 0.7 percent to 9,268 per dollar, the biggest gainer in Asia, according to Bloomberg data. The currency is the best performer in the region this year, excluding Japan.
Imports rose 44.6 percent to $9.54 billion in January from a year earlier after gaining 33.4 percent in the previous month. That left a trade surplus of $2.03 billion.
Indonesian consumer prices rose 0.3 percent in February from the previous month after gaining 0.84 percent in January.
Palm oil for May delivery rose 1 percent to 2,624 ringgit ($774) a metric ton on the Malaysia Derivatives Exchange as of 10:23 a.m. Jakarta time today. Prices for the edible oil have risen 37 percent in the past year. The cost of rice, the staple for Indonesia’s 230 million people, rose 4 percent to 8,100 rupiah ($0.87 ) a kilogram in February from the end of December, according to data from PT Food Station Tjipinang Jaya, Indonesia’s biggest market for the grain.
--With assistance from Michael Munoz in Hong Kong, Berni Moestafa and Yoga Rusmana in Jakarta. Editors: Stephanie Phang, Paul Panckhurst
%IDR
To contact the reporter on this story: Aloysius Unditu in Jakarta at aunditu@bloomberg.net
To contact the editor responsible for this story: Chris Anstey in Tokyo at
