Monday, January 10, 2011

Indonesia strives to reduce chili prices to contain inflation

The Indonesian government has called the public to grow chili at homes, following the skyrocketing prices of the commodity, as an effort to ease inflation pressure, media reported here Friday.

The commodity's prices have more than doubled recently, triggering concern among consumers.

Indonesian inflation accelerated to a 20-month high to 6.96 percent in December, higher than the central bank target of 4-6 percent, due to rising food prices, including those of chili and rice.

Indonesian Trade Minister Mari Elka Pangestu quoted by the Jakarta Post as saying that extreme weather and pest were blamed for poor supply of the commodity.

"There is not much we can do because this is a production problem caused by pests and the weather. The Trade Ministry can only focus on making sure there will be no distribution problems," Mari said on Thursday.

"People should be encouraged to plant chili shrubs in their yards. Just so you know, I've already planted chili shrubs at my house. I have 200 chili shrubs planted inside pots," she said.

Chili is one of the main ingredients badly needed by consumers in Indonesia.

Red chili price has climbed to more than 100,000 rupiah (some 11.17 U.S. dollar) per kilogram from the normal price of over 40, 000 rupiah (about 4.47 U.S. U.S. dollar).

Indonesia refrained from raising rate on Jan. 5 and kept it at a record low of 6.5 percent to prevent greater capital inflows which can raise currency volatility and financial instability.

On Dec. 29, the central bank tightened rules on banks' foreign- exchange holdings and overseas borrowing to ease inflation pressure and the impact of possible sudden reversal of capitals.


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