Inflation Controlled within Target Corridor throughout 2018 - Bank Sentral Republik Indonesia
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August 26, 2019

No. 21/1/DKom

Consumer Price Index (CPI) inflation was kept under control throughout 2018 within the 3.5±1% target range. Headline inflation was recorded at 3.13% (yoy) in December 2018, lower than the 3.61% (yoy) posted in 2017 and the 3.33% (yoy) average for the past three years. Notwithstanding, Bank Indonesia will consistently maintain price stability and strengthen policy coordination with the Central Government and Regional Administrations to control low and stable inflation, which in 2019 is predicted in the 3.5±1% target corridor.

Annually, contained core and volatile food inflation as well as lower inflationary pressures on administered prices contributed to control CPI inflation in 2018. Core inflation stood at the low rate of 3.07% (yoy) in line with policy consistency by Bank Indonesia in terms of maintaining exchange rate stability and anchoring rational inflation expectations. Price pressures on volatile foods (VF) were recorded at 3.39% (yoy), eased by a stable food supply and sliding international food prices. Furthermore, inflationary pressures on administered prices (AP) were low at 3.36% (yoy) in accordance with Government reluctance to adjust prices.

On a monthly basis, CPI inflation was controlled in December 2018 in line with seasonal trends. Headline inflation stood at 0.62% (mtm) in December 2018, increasing from 0.27% (mtm) the month earlier on the cyclical spike in demand at yearend. Volatile foods experienced 1.55% (mtm) inflation, up from 0.23% (mtm) the month earlier, triggered by purebred chicken meat and eggs, shallots and fresh fish. On the other hand, inflationary pressures on administered prices rose from 0.52% (mtm) to 1.20% (yoy) in the reporting period, edged up by airfares, train fares and intercity transport fares. In contrast, core inflation was recorded at 0.17% (yoy), down from 0.22% (mtm) in the previous period. The main contributors to core inflation were bottled water, rice with a side dish, house rentals and reinforcing steel bar (rebar).

Jakarta, 2nd January 2019
Communication Department


Agusman
Executive Director

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