Indonesia’s inflation in October lower than initial estimate

Indonesia’s inflation in October 2022 was under control at 0.16 percent (month-to-month/mtm), a decrease compared to September 2022’s inflation of 0.30 percent (mtm).

 

Jakarta, (Indonesia Window) – Based on data from the Statistics Indonesia, the Consumer Price Index (CPI) in October 2022 experienced deflation of 0.11 percent on a monthly basis (month-to-month/mtm), lower than the initial estimate and inflation in the previous month which was recorded at 1.17 percent (mtm).

The realization of Indonesia’s inflation which is lower than expected is in line with the impact of the fuel price adjustment on the rise in volatile food inflation, Director of the Communications Department of Bank Indonesia (BI) Erwin Haryono said in a statement on Tuesday.

The realization of Indonesia’s inflation is also in line with the impact of the adjustment in the prices of fuel oil on inflation in the administered prices group, which is not as high as the initial estimate, Erwin noted.

Meanwhile, the core inflation was maintained at a low level in line with the lower impact of the fuel price adjustment and the lack of strong inflationary pressure from the demand side, Erwin added.

With these developments, Erwin continued, the annual CPI inflation was recorded at 5.71 percent (year-on-year/yoy), lower than the initial estimate and the previous month’s CPI inflation of 5.95 percent (yoy).

The decline in the CPI inflation is in line with the closer policy synergy among the central government and regional administrations, Bank Indonesia, and various other strategic partners through the Central and Regional Inflation Control Team and the National Movement for Food Inflation Control in reducing inflation, including controlling the continued impact of fuel price adjustments.

For this reason, Bank Indonesia (the central bank) expresses its appreciation to all policy makers who jointly maintain price stability so as to support people’s purchasing power and encourage economic recovery, he said.

For the whole of 2022, Bank Indonesia views inflation as lower than the initial estimate, although it is still above the 3.0±1 percent target. Policy synergy between the central government and regional administrations and Bank Indonesia will continue to be strengthened to ensure that inflation returns to the set target.

The core inflation in October 2022 was under control at 0.16 percent (month-to-month/mtm), a decrease compared to September 2022’s inflation of 0.30 percent (mtm).

The decline in the core inflation on a monthly basis, which was lower than the initial estimate, was mainly influenced by the continued impact of fuel price adjustments on the core inflation which declined in October 2022 and the lack of strong inflationary pressure from the demand side.

On an annual basis, the core inflation in October 2022 was recorded at 3.31 percent (yoy), higher than inflation in the previous month which was recorded at 3.21 percent (yoy).

In the future, the core inflation is predicted to remain under control as the impact of further fuel price adjustments decreases amid continued demands and inflation control measures taken.

Bank Indonesia is committed to lowering inflation expectations that are currently too high (overshooting) and ensuring that the core inflation in the future return to the 3.0±1 percent target sooner, in the first half of 2023.

Meanwhile, the volatile foods category in October 2022 recorded deflation of 1.62 percent (mtm), higher than the initial estimate and deflation in the previous month of 0.79 percent (mtm).

This development was mainly influenced by deflation of various types of chili as well as eggs and broiler meat, supported by an increase in stock in line with the horticultural harvest, conditions in the supply of eggs and chicken meat that were more than adequate, as well as price control measures taken jointly by the central government. and regions, Bank Indonesia, and other strategic partners.

On the other hand, the rice commodity experienced inflation along with the end of the harvest in the majority of central areas. With these developments, inflation in the volatile foods category on an annual basis also decreased from 9.02 percent (yoy) last month to 7.19 percent (yoy).

Administered prices inflation in October 2022 decreased to 0.33 percent (mtm) compared to inflation in the previous month which reached 6.18 percent (mtm). The decline in inflation was primarily a direct impact (first round effect) of the gradual normalization of subsidized fuel prices and a decrease in air transport fares in line with the easing of jet fuel price pressure.

Further declines in inflation were restrained by the continued impact of subsidized fuel price adjustments on urban transport and household fuel inflation along with price adjustments at the retail level.

On an annual basis, the administered prices group experienced stable inflation compared to the previous month, namely 13.28 percent (yoy).

Reporting by Indonesia Window