According to data published by BPS-Statistics Indonesia, the Consumer Price Index (CPI) decreased slightly in March 2021 to 0.08% (mtm) from 0.10% (mtm) one month earlier.  Lower headline inflation was influenced by lower core inflation and administered prices (AP) inflation despite higher volatile foods (VF) inflation.  Annually, relatively stable CPI inflation was recorded at 1.37% (yoy) in March 2021 compared with 1.38% (yoy) in the previous period.  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, especially during the holy fasting month of Ramadan and Eid-ul-Fitr 1442 H.

Core inflation in March 2021 recorded 0.03% (mtm) deflation down from 0.11% (mtm) inflation in February 2021.  The main drag on core inflation were deflationary pressures on motor vehicles after the Government lowered the sales tax on luxury goods (PPnBM) for specific motor vehicles, coupled with ongoing gold jewellery price corrections in line with milder inflationary pressures on international prices.  Annually, core inflation stood at 1.21% (yoy) in the reporting period, down from 1.53% (yoy) in February 2021.  Persistently low core inflation is a corollary of compressed domestic demand, exchange rate stability and maintained international commodity prices, as well as policy consistency by Bank Indonesia to anchor inflation expectations.

After recording 0.01% (mtm) deflation in February 2021, volatile foods recorded 0.56% (mtm) inflation in March 2021.  Inflationary pressures on volatile foods primarily stemmed from bird’s eye chilies and shallots in response to inclement weather.  In contrast, red chilis and rice experienced deflationary pressures at the onset of the harvesting season.  Annually, therefore, volatile foods recorded 2.49% (yoy) inflation in the reporting period, up from 1.52% (yoy) in February 2021.

Administered prices recorded low 0.02% (mtm) inflation in March 2021, decreasing from 0.21% (mtm) the month earlier.  Such developments were explained by relatively stable administered prices in the reporting period.  Annually, AP inflation increased to 0.88% (yoy) from 0.66% (yoy) one month earlier.

Jakarta, 1st April 2021

Head of Communication Department

Erwin Haryono

Executive Director

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