Inflation Low and Under Control in October 2019 - Bank Sentral Republik Indonesia
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July 08, 2020
Consumer Price Index (CPI) inflation was low and under control in October 2019. CPI inflation was recorded at 0.02% (mtm) in October 2019 after posting 0.27% (mtm) deflation the month earlier. Low headline inflation in October 2019 was supported by a decline in core inflation coupled with deflationary pressures on volatile foods. On the other hand, administered prices inflation was stable. Cumulatively, therefore, CPI inflation as of October 2019 reached 2.22% (ytd) or 3.13% (yoy) annually, down from 3.39% (yoy) in September 2019. Moving forward, Bank Indonesia will continue to consistently maintain price stability and strengthen policy coordination with the central and local governments in order to ensure inflationary pressures remain under control. Bank Indonesia projects inflation in 2019 below the midpoint of the 3.5±1% range and then expects to maintain inflation in the 3.0±1% target corridor in 2020.
Core inflation continues to decline, thus supporting controlled CPI inflation.  Core inflation was recorded at 0.17% (mtm) in the reporting period, down from 0.29% (mtm) a month earlier. Core inflation was edged down by slower rising gold jewellery prices, while other commodities, such as noodles and rice with the side dish, were the main contributors to inflationary pressures. Annually, core inflation stood at 3.20% (yoy), decreasing from 3.32% (yoy) in the previous period. Core inflation remains under control in line with rational inflation expectations due to policy consistency by Bank Indonesia to maintain price stability, manage aggregate demand, sustain exchange rates in line with the currency's fundamental value and minimise the impact of global prices.
Volatile food prices experienced another period of deflation, despite decreasing on the previous month.  Volatile food deflation decreased to 0.47% (mtm) from 2.26% (mtm) the month earlier, primarily due to price corrections affecting several commodities, including various chili varieties, purebred chicken eggs, fresh fish, potatoes and garlic. In contrast, the prices of purebred chicken meat, shallots, rice, cucumbers, tomatoes and oranges have increased, thus offsetting further deflation. Annually, inflationary pressures on volatile foods were recorded at 4.82% (yoy), down from 5.49% (yoy) the month earlier.
Administered prices (AP) inflation has remained stable.  Inflationary pressures on administered prices were recorded at 0.03% (mtm), relatively unchanged compared with the 0.01% (mtm) posted the month earlier. The main contributors to AP inflation were cigarettes and household fuels, contrasting the ongoing deflation of airfares as seasonal demand continues to decrease. Annually, administered prices recorded 1.58% (yoy) inflation, down from 1.88% (yoy) in the previous period.
Jakarta, 1st November 2019
Onny Widjanarko
Executive Director 


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