REPUBLIKA.CO.ID, JAKARTA -- Indonesia has inched closer to keeping inflation rate below the target of 4 percent, plus or minus 1 percent, as the prices of goods and services remained under control all through this year.

The Central Statistics Agency (BPS) said earlier this month that the inflation rate in November rose by 0.21 percent, bringing the calendar year inflation rate to 2.37 percent and year-on-year inflation to 4.89 percent.

Meanwhile, core inflation touched 0.16 percent, year-to-date core inflation stood at 3.72 percent and year-on-year core inflation reached 4.77 percent in November.

The BPS noted that an increase in rice prices contributed significantly to the monthly inflation rate in November after the country posted deflation for two consecutive months.

It seems that El Nino-induced drought which caused several parts of the country to experience harvest failure was responsible for the rice price hike.

The drought prompted the government to import rice. The BPS noted that the rice imported by the government at the end of October was still unable to curb the November 2015 inflation rate of 0.21 percent.

"Perhaps the imported rice has not entirely entered the market as Bulog (the state logistics board) has not conducted market intervention," BPS Deputy Chief for Distribution and Service Statistics Sasmito Hadi Wibowo said here earlier this month.

One of the reasons why the imported rice had not entered the market was that the rice prices still benefited farmers while there were sufficient rice stocks, he said.

"Farmers had high bargaining power and therefore sold rice at relatively higher prices, while on the other hand consumers were satisfied with rice prices at retail level. Thus, Bulog saw no urgency to conduct market intervention," he said.

With the monthly inflation rate rising slightly to 0.21 percent in November, the BPS predicted the national inflation rate to stay below the earlier forecast of 4, plus or minus 1, percent this year.

"It seems that the inflation rate might be lower than that because if it touches 4 percent, the monthly inflation in December must be 1.6 percent or 1.7 percent. If that figure is not reached, the inflation rate will not reach 4 percent," Sasmito said.

He said there is still a possibility of the December inflation outstripping the November figure. But it will still be kept in check and will not be as high as some people have predicted. It may not reach even 1 percent.

"In general, the inflation rate in December tends to be high because of the holidays, Christmas and New Year. So far, it has been above 0.5 percent. But if we look at wholesale prices, these have risen significantly but without having any spectacular effect on retail prices. So, the situation is still controllable," he said.

"It will be difficult to see deflation in November and December unless special efforts are made. Normally, inflation is high in those months," Sasmito said.

But the BPS predicted that the inflation target of 4, plus or minus 1, percent for 2015 could be achieved as the prices of goods and services could be controlled throughout this year.

"For all of 2015, it has been possible to keep the inflation rate in check. Even in September and October, we recorded a deflation of 0.08 percent and 0.05 percent, respectively," BPS Chairman Suryamin said on the sidelines of an event, "Food Data as Evidence Based Policy Making," at the BPS building here on November 25.

Bank Indonesia believed that the inflation rate for all of 2015 will stay below the lower limit of its target of 4, plus or minus, 1 percent, thanks to the low inflation rate in November.

"Judging by the developments in inflation rate until November 2015 and strong coordination between the central and regional governments to contain inflation, Bank Indonesia believes the prices of commodities for all of 2015 will be kept under control and the inflation rate will stay in the lower limit of the inflation target of 4, plus or minus 1 percent," Executive Director of Communication Department at Bank Indonesia Tirta Segara said here on December 1.

Earlier, on November 17, Bank Indonesia Governor Agus Martowardojo said he also believed that the inflation rate in 2015 may stay below 3 percent, driven by persistently stable food prices and the disappearing impact of fuel price hikes.

"We have set the target inflation rate at 4 percent, plus or minus 1 percent, for all of 2015. Yet, the inflation rate has the potential to stay below 3 percent year-on-year," Martowardojo said during a press briefing.

To keep the December inflation at low level, the government and businesspeople alike should provide commodities, including foods and processed foods, at affordable prices.

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