from the 'Financial Times!
Inflation continues in Indonesia at a very rapid pace, with consumer prices tripling in the first four months of the year, and the quantity of money also increasing nearly threefold, Between December 1965 and the end of April this year, consumer prices rose to 96,030 on the index under which i.arch 1957 to February 1958 prices rate ag 100. In December this index stood at 36,347, Meanwhile the money in circulation rose to Rupiahs 7,106m, at the end of the second week in May, as against Rupiahs 2,982m. in December last.(These figures are in new Rupiahs, following the December reorganisation under which 1,000 old Rupiahs became one new Rupiahs and new notes were issued.) But not all prices have been rising fast this year. The price of rice in parts of Indonesia has been relatively stahle recently; textile prices have also come down, following the resumption of shipments from Japan. On the other hand most food prices have shot up, and services have also become much more expensive. The Beonomics iinister, Sultan Buwono, is influenced to some extent by University of Indonesia economists, who want to cut the rate of inflation gradually, perhaps to 50% next year and 20% the year after. No drastic action is planned however, partly because the overall political position is not yet clear, The current session of the hPRS(the seople's Provisional Consultative Council)in Djarkata, due to end on July 5th, is not expected to underwrite sufficient political changes for those who favour economie reform. lheanwhile the commercial sector, which is larjely Chinese, continues to work in terms of dollars patner than rupiahs. As the black market in money fluctuates, so do prices of items in foreign trade; thus while the black market rose to Rupiahs 180 a dollar for a short space of time last month-which roughly corresponds to the Loudon note rate of 60 rupiahs to the £- so prices of such luxury imported items of motor scooters rose, also falling away with a decline in the dollar rate to the present rupiahs 100 a dollar. (The official rate is just over 4 rupiahs to the dollar) Similarly, export prices also follow the dollar rate closely. The threefold increase in the black market rate since the turn of the year is the logical outcome of inflation.