REPUBLIKA.CO.ID, JAKARTA -- Finance Minister Chatib Basri said the impact of electricity tariff increase for industries and household consumers would not boost inflation and it could be controlled until the end of the year.
"The impact of the electricity tariff increase would not be big. It is predicted at a range of between 0.1 percent and 0.2 percent only," the finance minister said.
The predicted low impact had not led the government to reconsider its inflation rate assumption in the state budget 2014 set at 5.3 percent, he said.
"Its impact is not too big so that the inflation rate is predicted to remain at a range of 5.5 percent," he said.
The government is considering raising the electricity tariff in July this year in an effort to reduce expenditure on electricity subsidy and save on the state budget amounting to Rp8.51 trillion.
However, the policy to raise the power rate will need approval from the House of Representatives (DPR)'s Commission VII on energy affairs.
In the 2014 Revised Budget, the government raised the ceiling of its electricity subsidy expenditures by Rp35.7 trillion so that the electricity subsidy increases to Rp107.1 trillion from Rp71.4 trillion in the previous 2014 State Budget.
In the meantime, Bank Indonesia (BI/the central bank) has forecast that Indonesia's inflation in 2014 will reach 4.5 percent with plus minus 1 percent.
Based on notes, the inflation will still continue to increase in June and July, BI Deputy Governor Perry Warjiyo stated here on Friday.
"On a seasonal basis, there is a possibility of inflation increasing in June and July," he added.
Based on data released by the Central Bureau of Statistics (BPS), the inflation in May 2014 was recorded at 0.16 percent month-on-month, and the inflation between January and May was recorded at 1.56 percent.
His officials were optimistic that the inflation rate in 2014 will be at 5 percent, Perry remarked.
"The increase in inflation in June and July is seasonal in nature and will go down again in August until December and reach 5 percent by the year end," the BI deputy governor claimed.
Bank Indonesia said it will consistently observe various risk potentials, such as the increase in food prices as a result of the drought in several regions, and the indication that the El Nino weather phenomenon will take place in the second half of 2014.
"To counter these factors, we will consistently adopt measures in managing the inflation and increasing coordination with the government, both at the central government level and also at the regional level," he stressed.
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