Indonesia’s January 2023 inflation decreased on a monthly basis, mainly driven by a decline in inflation in the volatile food and administered prices groups.

Jakarta (Indonesia Window) – The Statistics Indonesia reported on Wednesday (Feb. 1), Indonesia’s January 2023 inflation decreased and was recorded at 0.34 percent on month-to-month (mtm), lower than that in the previous month by 0.66 percent (mtm).

Indonesia’s January 2023 inflation dropped on a monthly basis mainly driven by a decrease in inflation in the volatile food and administered prices category, the Head of the Communication Department of Bank Indonesia (the central bank/BI), Erwin Haryono, said in an official written statement quoted by Indonesia Window, Thursday.

With these developments, the annual Consumer Price Index (CPI) inflation was recorded at 5.28 percent (year-on-year/yoy), lower than that in the previous month which reached 5.51 percent (yoy), Erwin noted.

The positive development of the CPI inflation is inseparable from the influence of inflation control policy coordination with the central government, regional administrations, and other strategic partners through the Central and Regional Inflation Control Teams and the National Food Inflation Control Movement in various regions.

In the future, according to Erwin, Bank Indonesia believes the core inflation would remain within the range of 3.0 ± 1 percent in the first semester of 2023 and the CPI inflation would return to the target of 3.0 ± 1 percent in the second semester of 2023.

Bank Indonesia will continue to strengthen the monetary policy response, and continue to coordinate with the government to ensure that the inflation is reduced and controlled, he said.

The core inflation in January 2023 was under control, he explained, adding that the core inflation was recorded at 0.33 percent (mtm), an increase compared to that in the previous month of 0.22 percent (mtm).

The increase in the core inflation was in line with the seasonal pattern at the beginning of the year, particularly in the inflation for housing rental and housing contracts. On an annual basis, the core inflation in January 2023 was recorded at 3.27 percent (yoy), lower than that in the previous month of 3.36 percent (yoy).

The inflation for the volatile foods group in January 2023 decreased from the previous month's developments. The volatile foods group recorded the inflation of 1.40 percent (mtm), lower than that in the previous month which was 2.24 percent (mtm).

This development was mainly influenced by deflation in eggs and tomatoes. Meanwhile, the inflation for rice, various chili peppers and fresh fish increased in line with the increase in demand at the beginning of the year and a decrease in supply due to unfavorable weather conditions.

On an annual basis, the volatile foods group experienced the inflation of 5.71 percent (yoy), higher than the previous month's inflation of 5.61 percent (yoy).

The administered prices group recorded a deflation of 0.55 percent (mtm), after recording an inflation of 0.73 percent (mtm) in the previous month.

This development was mainly influenced by the deflation of air transport and gasoline-type fuel in line with the normalization of prices after Christmas and New Year and the reduction in fuel surcharge rates imposed by airlines, as well as a decrease in the price of non-subsidized gasoline in early January 2023.

On an annual basis, the administered prices group recorded an inflation of 12.28 percent (yoy), lower than the previous month's inflation of 13.34 percent (yoy).

Reporting by Indonesia Window