Raras Cahyafitri and Tassia Sipahutar, Jakarta – Indonesia surprisingly recorded a 0.35 percent deflation in September, the first since May, triggered by declining food and transportation prices. The country also booked its first trade surplus in August as both oil and gas and non-oil and gas imports fell from the previous month.
The Central Statistics Agency (BPS) head Suryamin said declining food and transportation prices played a significant role in the deflation. Prices of food commodities had fallen 2.88 percent, while transportation, communication and financial services were down 0.79 percent.
Suryamin noted that prices, especially in food, eased following the end of Idul Fitri festivities, supported by sufficient supplies. "We recorded lower food prices, such as shallot, cayenne pepper and broiler chicken eggs, in most of the cities surveyed," he said in a monthly media briefing.
The September results drove year-to-date inflation to reach 7.57 percent and the year-on-year figure to 8.4 percent. The outcome beat many analysts' predictions, which estimated that the country would see inflation – though at a slower rate – in September.
Finance Minister M. Chatib Basri argued the country's economic recovery and adjustment to the government's new policies apparently went faster that expected. "The most important thing now is to continue the ongoing efforts in order to see another deflation," Chatib said.
Concerns, however, linger as both imports and exports recorded further declines. Figures from BPS showed that the trade balance was surprisingly in a surplus of US$132.4 million in August, a significant improvement compared to a $2.3 billion deficit a month earlier. Suryamin noted that the August surplus was the first since March.
The country reported the first trade deficit this year in last April, which then puffed out the current account deficit and in turn hurt the rupiah's exchange rate.
"The surplus is mainly due to the cut in the fuel subsidy and the impact of Idul Fitri in August when some businesses were closed during the holidays. We will see further impact of the policy on fuel this September," Suryamin said.
Oil and gas imports dropped by 11.41 percent on a monthly basis to $3.67 billion in August. The government raised prices of subsidized fuel to between 22 percent and 44 percent last June as soaring demand was expected to hurt the country's state budget.
BPS figures showed that balance of oil and gas trade remained in a deficit of $900 million, as oil and gas exports declined by 12.77 percent to $2.77 billion in August compared to a month earlier. The oil and gas deficit reached $8.5 billion during the January to August period of the year.
The worrying thing was that August overall exports were down by 6.31 percent to $13.16 billion year-on-year, while imports also fell by 5.69 percent to $13.03 billion.
Trade Minister Gita Wirjawan said that the August surplus gave a bright break. "However, it doesn't mean that the bright situation will continue starting from August. I see that non-oil and gas was in surplus of around $2 billion, however, oil and gas always gives pressures," Gita said during a press briefing on the 28th Indonesia Trade Expo event.