Inflation Controlled in August 2019 - Bank Sentral Republik Indonesia
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September 18, 2019

No.21/65/DKom

Consumer Price Index (CPI) inflation was kept under control in August 2019. CPI inflation stood at 0.12% (mtm) in the reporting period, declining from 0.31% (mtm) the month earlier due to controlled core inflation as well as deflation of volatile foods (VF) and administered prices (AP). Annually, therefore, CPI inflation was recorded at 3.49% (yoy), rising slightly from 3.32% (yoy) in July 2019. Moving forward, Bank Indonesia will consistently maintain price stability and strengthen policy coordination with the central and local governments to ensure low and stable inflation in the face of inclement weather stemming from the protracted dry season that is forecasted to disrupt foodstuff supply. Bank Indonesia projects inflation towards the lower half of the 3.5%±1% target corridor in 2019 and then within the 3.0%±1% target range in 2020.

Core inflation was kept under control despite an increment in the rate compared to the previous period. Core inflation was recorded at 0.43% (mtm) in August 2019, up moderately from 0.33% (mtm) the month earlier. Annually, core inflation stood at 3.30% (yoy) in the reporting period, increasing from 3.18% (mtm) in July 2019. Core inflation was edged upwards by a 3.97% (mtm) or 12.64% (yoy) bump in the price of gold jewellery in line with higher international gold prices, coupled with more expensive school fees, house rentals and healthcare costs. Meanwhile, the prices of other commodities were kept under control as a result of policy consistency by Bank Indonesia to anchor rational inflation expectations, including maintaining the rupiah in line with the currency’s fundamental value.

Volatile foods (VF) experienced deflation in the reporting period due to adequate food supply. Volatile foods recorded 0.25% (mtm) deflation in August 2019, reversing the 0.89% (mtm) inflation posted the month earlier. VF deflation was primarily triggered by price corrections affecting shallots, purebred chicken meat, garlic and vegetables. In contrast, the prices of various chilli varieties, fresh fish and potatoes have increased. Annually, VF inflation stood at 5.96% (yoy) in the reporting period, increasing from 4.90% (yoy) the month earlier.

Administered prices (AP) continued to experience deflationary pressures in August 2019, weighed down by lower airfares. AP recorded 0.40% (mtm) deflation in August 2019 compared with 0.36% (mtm) the month earlier. AP deflation stemmed from further readjustments to airfares, especially amongst low-cost carriers, as the seasonal impact of higher festive demand continued to fade. Annually, AP inflation stood at 1.87% (yoy) in August 2019, down from 2.22% (yoy) in July 2019.

 

Jakarta, 2nd September 2019
COMMUNICATION DEPARTMENT

 

Onny Widjanarko
Executive Director

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