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Poverty and the Economy September 2013
With Idul Fitri falling early in the month, pass on effects from the fuel price increase in July, and the rapid depreciation of the rupiah, it is not surprising that the rate of inflation remained high in August at 1.1%, though much lower than July’s monthly inflation rate of 3.2%. The major contributors to inflation in August reflected expected price pressures: higher food prices (the impact of Ramadan and Idul Fitri), the higher gold prices imported inflation, and rising transportation prices reflecting the impact of higher fuel prices. Seasonal increases in school fees also contributed to inflation in August. We would expect downward pressure on food prices in September, representing the other side of the seasonal increase in food prices during Ramadan. At the same time the major adjustments to the fuel price increase should have been completed, taking some pressure off of inflation. But the continuing weakening of the rupiah will put upward pressure on prices.
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