REPUBLIKA.CO.ID, JAKARTA -- Inflation rate in the third week of July reached 0.76 percent, according to Governor of Bank Indonesia (BI) Agus Martowardoyo.

"Inflation rate in the third week (of July) was lower than predicted. This indicates that it can still be kept in check," he said after attending an Eid al-Fitr gathering at the Financial Services Authority building here on Monday.

Earlier, the central bank had predicted that inflation in the third week of July would reach 1.12 percent as a result of hikes in the prices of basic commodities during the fasting month of Ramadan.

"The prices of red chili, rice and other basic commodities were on the rise, but they could still be kept in check," he pointed out.

So far, the central government and regional administrations have coordinated well to control inflation, he pointed out, adding that further efforts to control inflation are currently concentrated on transportation costs, which usually rises during the Eid al-Fitr festivities.

Previously, BI had estimated that the inflation rate in July, which coincided with the festival of Eid al-Fitr, could potentially be the lowest as compared to the average monthly inflation recorded in the same period in the past five years.

Martowardoyo also stated that since 2010, the average monthly inflation rate in July reached 0.85 percent.

Moreover, the lower-than-expected inflation rate in the third week of July has bolstered the central bank's confidence in its ability to be able to control the value this year to 4.1 percent.

Furthermore, the calendar inflation rate (year to date inflation) from January to June 2015 was 0.96 percent.

The BI governor admitted that the lower inflation rate in the third week of July was a result of the public's declining purchasing power. However, their declining purchasing power did not entirely indicate that the domestic economy was under pressure.

The drop in people's purchasing power was a result of external factors, including low prices of global commodities, which caused people's income to decline.

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