May's 0.03 Pct Deflation As Expected

Jakarta, June 3 (Antara) - Indonesia recorded a deflation of 0.03 percent in May as has been expected before, chief economic minister Hatta Rajasa said here on Monday. "Yesterday I already said that there would possibly be a deflation in May like in April," he said when met at the parliament building. He however said that Indonesia still suffered a deficit of US$1.62 billion in its trade account in April. "So, we must really guard capital transactions (foreign direct investment) and our financial transactions," he said. He said he was optimistic the inflation target of 7.2 percent by the end of this year would be achieved although the price of subsidized oils would be raised. "I am optimistic the inflation target at a range of around seven percent would be achieved despite oil price adjustment and the rate of poverty could be reduced," he said. Regarding potential inflationary pressure this month Hatta said it would be normal and controllable. "The potential is there because of a new school year that would increase spending and a fasting month which is usually followed by increasing consumption but they will all be controlled by providing enough supply," he said. The minister said shallot production is sufficient to meet demand in the month and so there is no need to worry about it. "I am not worried inflation would rise too high in June as the key (to controlling it) is our supply," he said. The national statistics agency said the deflation of 0.03 percent in May was caused by the drop in the prices of chilli and gold jewelry. It said the year-to-date inflation was recorded at 2.3 percent while the year-to-year date was 5.47 percent with a core inflation are 3.99 percent.