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Full-year inflation in check in 2015
Overall prices of goods and services remained in check last year as the annual rate fell below the official target, the Central Statistics Agency (BPS) announced on Monday
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Overall prices of goods and services remained in check last year as the annual rate fell below the official target, the Central Statistics Agency (BPS) announced on Monday.
Data from the BPS showed that inflation throughout 2015 reached 3.35 percent, with December inflation standing at 0.96 percent.
The result was below the government's expectation of 5 percent, but slightly higher than the 3 percent estimated by Bank Indonesia (BI).
All cities surveyed by the BPS reported inflation in December, with Merauke in Papua posting the highest rate at 2.87 percent and Cirebon in West Java province posting the lowest at 0.27 percent.
Food and ingredients were two of the biggest contributors to inflation last year, according to the data.
Rice, for example, topped the list as it contributed 0.31 percent to the total inflation figure, followed by shallots in third position, broiler chicken in fourth and fresh fish in fifth. Cigarettes, meanwhile, were second on the list.
BPS head Suryamin lauded the government and central bank's efforts to control inflation, saying the rate was the lowest posted in the past five years.
'Last year's core inflation rate of 3.95 percent was also the lowest since 2011. It meant that prices did not get out of control, even though some upticks were recorded,' he said.
BI Governor Agus Martowardojo acknowledged that there were pressures approaching year-end.
'We saw rising prices of shallots, chillies, chicken and eggs. We have met with the government, especially ministries under the Office of the Coordinating Economic Minister, to better prepare for inflation in the future,' Agus said.
In a separate meeting held last week, Coordinating Economic Minister Darmin Nasution said he was prepared to import several commodities to control inflation, such as rice, cattle, sugar, corn and soybeans.
At least 460,000 tons of rice will be imported in January to ensure 1.35 million tons of rice stocks by the end of March.
'We need to import rice in January because we are planning to conduct market operations between January and February to provide rice for the people,' he said.
'This is important because we are anticipating a possible shortage due to a shift in the harvest season from the El Niño [weather phenomenon].'
Darmin added that the government expected the country to pass the lean season and domestic production to return to normal by April.
Meanwhile, OCBC Bank economist Wellian Wiranto wrote in a research note that the inflation result came above market expectations, but 'nonetheless represents the lowest year-on-year price increase that the economy has seen since early 2000'.
Wellian added that even though December inflation was higher than expected, 'it is still keeping the real rate so lofty that it would not tie Bank Indonesia's hands in cutting rates this month'.
Glenn Maguire, ANZ chief economist for South Asia, ASEAN and the Pacific, questioned whether BI would use what could be a three-to-four month window of pronounced disinflation to cut interest rates.
'We increasingly suspect the answer to that question is yes,' Maguire said, adding that ANZ had penciled in a rate cut of 50 basis points in the first half.
According to ANZ, an annual disinflation impulse was likely to occur, especially as the government plans to slash the prices of Premium, Pertamax and Pertalite gasoline, diesel and liquefied petroleum gas on Tuesday.
Prima Wirayani contributed to this story.
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