Moris Morissan, Jakarta – Indonesia on Friday reported its seventh straight month of falling prices in another sign that the grass roots of its shattered economy were recovering from crisis. Indonesia's statistics bureau reported month-on-month inflation of minus 0.68 percent in September, bringing the year-on-year rate – which peaked at 82.4 percent in September last year – down to a mere 1.25 percent. The figures mainly reflect falling food prices, as staple crops like rice rebound after widespread drought last year and as the nation's distribution network recovers from massive upheaval.
When Indonesia collapsed into political and economic turmoil in mid 1998, some retailers simply shut down and many Chinese merchants, who had come under popular attack, fled the country.
But the statistics bureau said Indonesians were now more hardened to their country's problems and no longer reacted by stopping production or closing down businesses.
"Unlike last year, right now people have got used to rumours of unrest and they are not easily prompted to stop production or close the shops," bureau chief Sugito Suwito said.
Only last week, Jakarta's streets erupted into riots in which seven people were killed. The unrest was sparked by mass protests over a new internal security law. "The recent student protests about the security bill did not affect people significantly," Suwito said.
Economists said September's deflation was widely expected and that it would be difficult to maintain to the end of the year. "It was already expected in September, but we have to look till the end of the year because people will buy more ahead of Christmas and the Eid al Fitr Moslem festivals," said Laksono Widodo, head of research at ING Baring Securities Indonesia.
September's fall in prices followed monthly inflation of minus 0.93 percent in August and a yearly rate of 5.77 percent. The bureau said lower food prices contributed most to September's result. It has predicted that inflation in calendar 1999 will be under five percent.
Indonesia also reported on Friday a trade surplus of $2.585 billion in August. Exports totalled $4.599 billion and imports $2.014 billion. The trade surplus in July was $2.007 billion. Non-oil exports in August were $3.585 billion and non-oil imports in August were $1.635 billion.
Indonesia's trade surplus has ballooned as it endures its worst economic crisis in three decades – not because of a rise in exports but because imports have dived.
Indonesia has been engulfed by violence since it was swept up in Asia's economic crisis in 1997. Riots in the capital in May last year killed around 1,200 people and finally forced long-term president Suharto from power after 32 years.