Increase in Food Prices Push Inflation Next Year

The government is still worried about the trend of increasing food prices affect inflation until next year. As economic growth, demand and price of goods will continue to climb in 2011.

"Not just for December but also for January and early next year the situation will not be encouraging, the situation will still be heavy," said Vice Minister of Agriculture Krisnamurthi when asked about the effect of food on inflation this year.

We met at the Office of Coordinating Ministry for Economic Affairs, Jalan Banteng Square, Jakarta, Thursday (16/12/2010), Bayu rate of food price increases due to the increased demand due to rising world economic growth is expected to be even better next year.

"Food is because the overall world situation. So the world's climate is still uncertain, on the other hand due to improved world economic growth create demand for food went up, and all the data showed that there was a significant increase in demand compared to 2009-2010 is due in economic situation is still a recession, demand in late 2010 early 2011 is expected to be high, "he said.

Bayu said economic growth in some countries is predicted to reach double digits.

"Like Singapore, there was double digit for the next 3 months, China's near 10, Indonesia itself may be between 6-7%, India will be positive with good enough, the U.S. about 2-3%. Thus, all countries will have the economic performance good and it made their demand to rise, "he explained.

This, further Bayu, causing a disruption of supply of food commodities. Moreover, coupled with a climate of uncertainty factors that impact will be seen up to 4 months in advance.

"On the other hand, climate is still uncertain. For example, an example for Australia, this month is very wet and it affects the production of Australian wheat and sugar, and it in turn in March that the situation the world's wheat and sugar can be affected by the situation in Australia. The impact will be two -3-4 months ahead, "he explained.

So also with other commodities, such as world oil prices are showing upward trend.

"For example only, all commodities have the same pressure, the CPO also translucent in 1200 dollars for example now and I think still going strong to the beginning of 2011," said Bayu.

Therefore, Bayu predict commodity prices will still be volatile until the first quarter of next year. The reason, in March-April there is additional supply due to the harvest that occurred in several countries including Indonesia.

"The tendency is still to be high. Hopefully just the first quarter due in March Insha Allah Indonesia, Southeast Asia will be harvested in March / April. Additional supplies will hopefully help ease price pressures in the international market," he hoped.

As a solution to the current situation, Bayu express the government's efforts continue to increase domestic production. For next year, he added, expected growth in rice production could reach 3 to 3.5% by taking into account climatic situation that may still not friendly.

"We must continue to increase our production, whatever we'll try to find a solution so do not be disturbed. For example, rice 3.5%, we should be able to achieve as a target figure, to which others can adapt," he said.

In addition, continued Bayu, by intervening into the market to control prices.

"So the market would still be volatile, but we must have the ability to intervene does not help most low-income groups," he explained.

Regarding imports of rice, Bayu can not ensure. Because the provision of rice imported by the new Bulog be ascertained at the time of harvest.

"I think the limit is still determined Bulog imports until 15 February as we estimate it around mid-February that the main harvest begins. So we expect BULOG rice does not go into the market at the time of harvest," he said.

Thus, Bayu expect inflationary pressure as prices of food can be minimized in the next year.

"We will try to avoid karen experience in 2010, we try to see the impact of inflation or the effect of inflation we give food to a minimum," he concluded.