Based on data published by BPS-Statistics Indonesia, the Consumer Price Index (CPI) in July 2022 recorded 0.64% (mtm) inflation, up slightly from 0.61% (mtm) one month earlier.  The monthly uptick primarily stemmed from administered prices, contrasting milder inflationary pressures on volatile food and low core inflation.  Annually, therefore, CPI inflation in July 2022 stood at 4.94% (yoy), increasing from 4.35% (yoy) the month earlier.  In 2022, CPI inflation is projected above the upper bound of the target corridor before returning to 3.0%±1% in 2023.  Bank Indonesia will remain vigilant of the risks posed by rising inflation expectations and core inflation moving forward, while strengthening the monetary policy mix as required.  Furthermore, Bank Indonesia will also continue to strengthen policy coordination with the Government and other relevant institutions through the central and regional inflation task forces (TPIP and TPID) to manage inflation expectations from the supply side, boost production and safeguard food security.

Core inflation was maintained low at 0.28% (mtm) in July 2022, as well as recorded at 0.19% (mtm) in June 2022.  The moderate increase was primarily driven by motor vehicles and house rentals on the back of greater community mobility.  Further increases were offset, however, by price corrections affecting gold jewellery in response to the international gold price.  Annually, core inflation in July 2022 remained low at 2.86% (yoy), despite climbing marginally from 2.63% (yoy) one month earlier.  Low core inflation was maintained with the support of policy consistency by Bank Indonesia to anchor inflation expectations. 

Volatile food (VF) in July 2022 experienced lower 1.41% (mtm) inflation compared with 2.51% (mtm) in the previous period.  The main contributors to milder inflationary pressures on volatile food were cooking oil, purebred chicken eggs, garlic and vegetables.  In contrast, the prices of various chili varieties, shallots and fresh fish increased in response to supply-side disruptions caused by heavy rainfall at several production hubs. Annually, VF inflation increased to 11.47% (yoy) in the reporting period from 10.07% (yoy) the month earlier.

Inflationary pressures on administered prices (AP) in July 2022 increased to 1.17% (mtm) from 0.27% (mtm) in June 2022.  Airfares, household fuel and filtered clove cigarettes edged up AP inflation in the reporting period in line with increasing air mobility and aviation fuel prices caused by spiralling global energy prices, adjustments to non-subsidised energy prices and the ongoing transmission of tobacco excise duty to selling prices.  Annually, administered prices recorded 6.51% (yoy) inflation in July 2022, up from 5.33% (yoy) the month earlier.

Jakarta, 1^st August 2022

Head of Communication Department

Erwin Haryono

Executive Director