Inflation in 2017 Controlled at Bank Indonesia's Inflation Target - Bank Sentral Republik Indonesia
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January 20, 2018

No. 20/ 1 /DKom

Inflation of Consumer Price Index (CPI) in December 2017 is recorded 0.71% (mtm) and overall in 2017 it reaches 3.61% (yoy), within the targeted inflation range of 4±1% (yoy). With such progress, inflation target may be met in three consecutive years. Controlled inflation in 2017 is boosted by low core inflation of 2.95% (yoy), in line with the consistent policy of Bank Indonesia on maintaining exchange rate stability and directing inflation expectation; low inflation of volatile food of 0.71% (yoy), which is the lowest in the last 14 years, in line with the maintained supply and distribution of food; and controlled impacts of various increasing tariffs in the inflation of administered prices of 8.70% (yoy). In addition, inflation in 2017 is also supported by the positive factor of supply and demand, low external pressure, and strong policy coordination between BI and the Central and Regional Governments.

CPI inflation in December 2017 increases compared to last month (0.20%, mtm) according to the seasonal pattern. Inflation in December 2017 is lower than the average December inflation in the last three years of 1.28% (mtm). By component, the increasing inflation is primarily attributable to inflation of volatile food group and administered prices group amidst the low core inflation.

Core inflation is recorded 0.13% (mtm), same as the previous month. Such progress is in line with the anchored inflation expectation, low domestic demand, stable exchange rate, and low global prices. Inflation of volatile food is recorded 2.46% (mtm), increasing than the previous month of 0.38% (mtm). Inflation is primarily attributable to rice, fresh fish, leghorn chicken egg and meat, red chili, tomato, and cayenne pepper. Inflation of administered prices is recorded 0.91% (mtm), increasing than the previous month of 0.21% (mtm). Such inflation movement is primarily attributable to the increase in airfare, train fare, and intercity transport fare in line with the holiday season and adjustment to the tariff of non-subsidized fuel. In addition, pressure from inflation of administered prices is also boosted by the increase in the prices of various cigarettes.

Going forward, inflation is estimated to be at the 2018 inflation target, i.e. 3.5±1%. Policy coordination between the central and regional governments and Bank Indonesia will be consistently reinforced in inflation control.

Jakarta, 2 January 2018
Communication Department

Agusman
Executive Director

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