Analyst Projects Year-End Inflation Over 9%

TEMPO.CO, Jakarta - Tony Prasetiantono, head of the Gadjah Mada University Center for Economics and Public Policy Studies, estimates that the 2013 year-end inflation will reach more than nine percent, due to imported inflation has begun to start on the fourth quarter. The increase is in line with the exchange rate that still perches at around Rp11,000 per US dollar, that lead producers to raise their selling prices.

In the second and third quarter, businessmen refrained from increasing prices as they still had stocks of goods produced using the old currency rate. In addition, producers were still hoping that the exchange rate would return to normal levels, in the range of Rp10,000 per U.S. dollar.

"But later they began to realize the complexity of the structural problems faced by the Indonesian economy," said Tony. As a result, employers began to raise selling prices.

A similar sentiment was expressed in Bank Indonesia' estimated price survey released last week. A number of respondents expected price increases in the next three and six months.

By the end of the year, products prices are expected to rise following an increasing demand for F&B and tobacco products ahead of Christmas and New Year's celebrations.

MARTHA THERTINA | PRAGA UTAMA | ANANDA TERESIA | RR ARIYANI