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Jokowi raises alarm on domestic inflation amid Ukraine crisis
The government is finding it harder and harder to maintain prices as commodity prices surge, fueled by the war in Eastern Europe.
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President Jokowi speaks at the Kompas CEO Forum on Thursday, Nov. 18, 2021. (Courtesy of Kompas)
P
resident Joko “Jokowi” Widodo has said that the Ukraine crisis might tip the balance of domestic price stability as the war exacerbates a rally in global commodity prices.
He said on March 11 that Indonesia “keeps holding and holding” onto current prices, even as global food and energy prices go up rapidly, such that Indonesia’s inflation remained relatively low at less than 3 percent.
The government has upheld price limits on crude palm oil, cooking oil, beef, subsidized fuel and subsidized cooking gas. Jokowi admitted that holding onto these prices was becoming increasingly difficult.
“Alhamdulillah [Thank God], we are still at 3 percent. But how long can we hold [prices]?” said Jokowi during a visit to Sebelas Maret University (UNS) in Surakarta, Central Java.
Global commodity prices have been rising this year as the world recovers from the COVID-19 pandemic, but the Russia-Ukraine war has exacerbated the rise as both countries are major commodity producers.
Oil prices have surpassed US$130 per barrel, double the level in the beginning of the pandemic. Gas, nickel, coal, aluminum and wheat, which are major products of Ukraine and Russia, are also surging to multiyear highs.
Indonesia has responded by raising prices on non-subsidized fuel and liquefied petroleum gas (LPG) to keep inflation low.
