No. 23/157/DKom

After recording 0.32% (mtm) inflation in May 2021, the Consumer Price Index (CPI) in June 2021 experienced 0.32% (mtm) deflation. CPI deflation stemmed from all components, namely core inflation, volatile food and administered prices. Annually, consumer price inflation stood at 1.33% (yoy) in June 2021, down from 1.68% (yoy) the month earlier. Moving forward, Bank Indonesia remains committed to maintaining price stability and strengthening policy coordination with the central and regional governments to control inflation in 2021 in line with the 3.0%±1% target.

Core inflation decelerated to 0.14% (mtm) in the reporting period from 0.24% (mtm) one month earlier. In general, the main drag on core inflation was the normalisation of demand after the recent Ramadan and Eid-ul-Fitr festive period. The salient contributors to core inflation included gold jewellery in line with international prices, house rentals as public activity restarts and motor vehicles after the Government lowered the sales tax on luxury goods for certain types of motor vehicle. Annually, core inflation was recorded at 1.49% (yoy), up from 1.37% (yoy) in May 2021. Persistently low core inflation is the result of compressed domestic demand, exchange rate stability and policy consistency by Bank Indonesia to anchor inflation expectations.

Volatile food (VF) recorded 1.23% (mtm) deflation in June 2021, contrasting the 0.39% (mtm) inflation in May 2021. The primary drivers of VF inflation in the reporting period were price corrections affecting various chili varieties, purebred chicken meat and shallots as demand continued to normalise after the recent festive period amidst adequate supply. Annually, VF inflation decelerated to 1.60% (yoy) from 3.66% (yoy) in the previous period.

Administered prices (AP) also experienced inflation in June 2021 at 0.21% (mtm) after recording 0.48% (mtm) inflation in the previous period. Such developments were in response to lower transportation fares after the recent holiday period, including airfares, intercity fares and railway fares. Annually, AP inflation decreased to 0.49% (yoy) in June 2021 from 0.93 % (yoy) in May 2021.