Rising Prices, High Interest Rates

Wednesday, March 24, 2010

Consumer confidence in the government has fallen because of the rise in cost of basic food staples. A survey conducted by the Danareksa Research Institute in the fourth quarter of 2009 indicates this trend. Since Lebaran last year the cost of sugar, rice and cooking oil has not fallen. This is because of their high costs on the international market and because the domestic supply is frequently not available. This problem needs to be solved soon as it drives up inflation rates. A mounting inflation rate would have a very adverse affect on the economy. At the very least interest rates at the banks which are currently quite high would remain so.

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Hit by the Rising Cost of Staples

THE Consumer Confidence Index has shrunk in the last three months. The trigger has been the increase in the cost of a number of staples and processed foods. The price of rice and sugar for example which rose in the period just before Lebaran last year, has not fallen back to pre-Lebaran levels. National sugar production levels are not steady and the government is trying to flood the market with imported sugar. How

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