Government Cautious of Inflation
Wednesday, 03 January, 2007 | 14:40 WIB

TEMPO Interactive, Jakarta: The inflation rate in December 2006 rose sharply by 1.21 percent.

Inflation fluctuations caused the inflation rate from January to December and annual inflation (between December 2005 and December 2006) to reach 6.6 percent.

“But, from a global perspective, 6.6 percent inflation is already quite good,” said Finance Minister Sri Mulyani Indrawati in Jakarta yesterday (2/1).

In the State Budget 2006, the government targeted inflation in 2006 at eight percent, with Bank Indonesia (BI) targeting inflation at eight percent plus or minus one percent.

This means that the 2006 inflation rate of 6.6 percent is better compared to what was targeted in the State Budget.

Although the 2006 inflation rate was relatively low, the government is still cautious of next year's inflation, especially from the consumption aspect.

This is because, bearing in mind December 2006's inflation rate of 1.21 percent, the food sector’s contribution to inflation is in fact very dominant.

In the future, said Sri Mulyani, the government and BI will be more careful in maintaining the rate of inflation to remain low, especially inflation that results from rise in demand and infrastructure projects in early 2007.

Agus Supriyanto and Kurniasih