REPUBLIKA.CO.ID, JAKARTA -- Institute for Development of Economic and Finance (Indef) said the government could keep inflation under control if it could maintain energy and food price stability.

"Inflation data show from year to year if the prices of energy and food commodities could be controlled it is almost certain we could curb inflation," Indef Director Enny Sri Hartati said at a function here on Wednesday.

The core of the problem of economic instability lies in the instability of the prices of energy and household basic necessities, Enny said.

Rise in the prices of energy and basic necessities pushed up the country's inflation to 0.5 percent in May or the highest monthly's inflation so far this year, Enny said.

She said the purchasing power of the people was weakened by energy and food price instability.

The purchasing power of the people has been weakened by government policies such as rise in the energy prices late last year that pushed up inflation, she said.

In order to create energy price stability, the government needs to create energy self sufficiency, she said.

There should be allocation or investment by the government to strengthen energy security in the state budget, she added.

In order to give greater fiscal room for energy, the government needs to improve efficiency in the use of budget, she said.

She said, indeed, the government already started move to improve efficiency in budget spending by cutting subsidy on oil fuel (BBM).

"It was bold step by cutting the subsidy. From the point of logic the government has taken the right step as more fund could be appropriated for productive sectors," she said.

However, the government failed to anticipate the impact of the BBM subsidy cut on the stability of the prices of essential goods, she said.

"This was caused by lack of coordination that what we have in the first quarter of this year was a decline in the household consumption," she said.

She said household consumption grew by less than 5 percent per day in the first quarter of 2015.

"If the people's purchasing power did not decline and the growth of household consumption could be maintained at around 5.4 percent, our economy could grow by around 5 percent," she said.

Earlier the Central Bureau of Statistics (BPS), said inflation in May 2015, was 0.5 percent or the highest May's inflation in the past seven years, triggered by an increase in food prices.

"The highest May's inflation earlier was 1.41 percent in 2008. The contribution to May's inflation this year came from foodstuff although rice contributed to deflation," BPS chief Suryamin said.

With inflation 0.5 percent in May, the country's inflation in the first five months of the year was 0.42 percent and year-on-year inflation was 7.15 percent. Core inflation was 0.23 percent and core inflation on-year was 5.04 percent.

Based on groups of spending, foodstuff group accounted for 1.39 percent of the May's inflation, manufactured food, drinks, cigarette and tobacco for 0.5 percent and health group for 0.34 percent.

Among commodities rising in prices and contributing to May's inflation included red chili, pure bred chicken meat and eggs, red onion, garlic, fresh fishes, electric tariff, tomato, and green chili.

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