No. 25/1/DKom
Developments in December 2022 indicate controlled Consumer Price Index (CPI) inflation.
Based on data published by BPS-Statistics Indonesia, CPI inflation in
December 2022 stood at 0.66% (mtm), with headline inflation in 2022 thus
reaching 5.51% (yoy) from 1.87% (yoy) in 2021. This exceeds the
3.0%±1% target, primarily impacted by the knock-on effect of subsidised
fuel price adjustments in September 2022. On a monthly basis, various
developments point to manageable inflation after the fuel price hikes,
as reflected by lower inflation expectations and milder inflationary
pressures than previously expected. CPI inflation remains under control
due to the positive impact of close policy synergy between the (central
and regional) Government, Bank Indonesia and various other strategic
partners to lower the rate of inflation, including the second-round
impact of fuel price hikes. Moving forward, Bank Indonesia will
continue to strengthen its policy response to ensure continued decrease
in expected inflation and inflation so that core inflation remains
within the range of 3.0%±1%. Furthermore, policy coordination is
constantly strengthened, particularly in terms of the National and
Regional Inflation Control Teams (TPIP and TPID), while strengthening
the National Movement for Food Inflation Control (GNPIP) in various
regions.
CPI inflation in December 2022 was predominantly influenced by seasonal year-end trends.
Core inflation was recorded at 0.22% (mtm), up from 0.15% (mtm) the
month earlier on the back of house rent inflation. Meanwhile, volatile
food (VF) inflation increased to 2.24% (mtm) after recording 0.22% (mtm)
deflation in the previous period in line with seasonal year-end
trends. Inflationary pressures on administered prices (AP) increased to
0.73% (mtm) from 0.14% (mtm) in the reporting period in response to
higher water supply tariffs and a seasonal spike in demand for airfares
during the Christmas and New Year festive period, as well as
inflationary pressures on filtered kretek (clove) cigarettes.
Weaker-than-expected
inflationary pressures in 2022 have buoyed the promising inflation
outlook for 2023, with a return to the 3.0%±1% target corridor forecast.
Low core inflation was maintained in 2022 at 3.36% (yoy) in line with
the muted knock-on effect of fuel price adjustments, coupled with mild
inflationary pressures on the demand side. VF inflation also remained
under control in 2022 at 5.61% (yoy) given close policy synergy and
coordination through the TPIP-TPID teams and GNPIP movement to safeguard
adequate supply, smooth distribution, price stability and effective
communication. Meanwhile, inflationary pressures on administered prices
were lower than expected, at 13.34% (yoy), in line with smaller price
adjustments to fuel and air fares.
Jakarta, 2nd January 2023
Communication Department
Erwin Haryono
Executive Director
