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RISING FOOD PRICES

Inflation hits Indonesia's poor

AFP, Jakarta
Jakarta street food seller Dairah is among millions of poor Indonesians feeling the pinch as soaring commodities prices threaten the fragile stability of Southeast Asia's largest economy.
Until last week, a typical day for the 49-year-old mother of six started before dawn with the preparation of traditional "lontong" rice cakes wrapped in banana leaves, which she would then sell to street vendors near her home.
But last month the government raised the price of rice by 7.5 percent to 4,300 rupiah per kilogramme from 4,000 rupiah (43 cents), and Dairah had to close her little business and take work as a maid.
"Usually with 10,000 rupiah (slightly over a dollar) I can buy about three litres of rice but now I can't make any profit from selling lontong," she told AFP at her tiny brick and cardboard home in one of Jakarta's slums.
High food prices helped drive Indonesia's March inflation rate to 8.17 percent over the year before, the biggest increase since October 2006.
Prices are expected to keep rising, with the government set to hike subsidised fuel prices in June to minimise the impact of record oil prices on the national budget.
Cooking oil has nearly doubled in price over the past year, and the cost of soy beans, a major source of protein for Indonesia's poor, has also soared.
"The price of food has gone up so I can't feed my family by selling rice cakes alone," Dairah said. "I have to work in people's houses doing laundry or cleaning to earn money. They pay me about 25,000 rupiah a day."
Her husband, Marjito, a driver, retired five years ago
after his health deteriorated, leaving Dairah as the family's main breadwinner.
Their six adult children, who live with them in a tiny house, have no regular jobs but get by doing odd jobs around the neighbourhood.
"The price hike will be felt most by people who spend a large chunk of their income to buy rice," economist Widyono Soetjiptosaid.
Mangara Tambunan, an economist with the Centre for Economic and Social Studies
think tank, said the government's decision to increase the price of rice would do little to help farmers.
"The increase will effectively benefit only the wholesalers, while the farmers will get very little from it," he said. "Poor infrastructure leaves farmers no option but to sell their harvest at lower prices to wholesalers."
The World Bank has said that by 2006 almost 18 percent of Indonesians were living beneath the poverty line.
The Asian Development Bank says soaring food prices are driving more Asians below the poverty line and some countries might have to seek foreign aid to help feed those in the most need.
Asia's rice stocks are the lowest in decades but the ADB believes they are still adequate to meet demand.
Indonesia, the world's third biggest rice producer, expects to produce enough rice to feed its more than 230 million people this year
Harry Seldadyo, an economics researcher from the University of Groningen who is based in Jakarta, said there were no reliable statistics to show how the rising commodities prices were affecting Indonesia's poor.
"But you can see it around you that there are many people starting to offer services that they weren't before. For example, near my house people are offering to cut grass in your garden." he said.
He said the urban poor had
few options -- either they sell their few assets and dip into their savings or they work longer hours each day to make ends meet.
Those who have poured info the cities from rural areas looking for work were unlikely to return to their villages despite the hard times.
"Going back home to their villages is not an option. They couldn't go back unless there's jobs, such as working as labourers during the harvest season, " he said.