Stock index suffers steepest drop since Oct. 2008

The Jakarta Post, Jakarta | Mon, 01/10/2011

The country's benchmark stock index, the Jakarta Composite Index (JCI), went into freefall at midday, suffering the steepest drop in more than two years since October 2008.

JCI plummeted 4.19 percent, or 146 points, at the bourse's noon break, sliding back to the 3,400 level at 3,485 amid widespread inflation worries.

Indonesia's inflation neared 7 percent in 2010, with food prices increasing by almost 18 percent mainly due to climate anomalies that hampered the harvest season in the country, where domestic consumption accounts for more than 60 percent of the economy.

Despite the high inflation, the central bank has kept its benchmark interest rate at a record low 6.5 percent for 18 consecutive months.

Analysts have expressed concern that if the rate is not increased, inflation could hamper economic growth, which the government expects to reach 6.4 percent this year.

Blue-chip stocks suffered the most in Monday's trading, with Astra Internasional, the biggest firm by market capitalization on the nation's stock exchange, slipping nearly 6 percent to Rp 46,250 a share. (est)

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