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Inflation softening to 5.28% further alleviates pressure on BI
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Shoppers walk through a market on the eve of the Lunar New Year in Surakarta, Central Java, on Jan. 21. (AFP/Adek Berry)
I
ndonesia’s inflation mellowed in January but remains well above the central bank’s target and varies widely from one city to another.
Headline consumer price index (CPI) growth dropped to 5.28 percent year on year (yoy) from 5.51 percent yoy in December.
Month-to-month (mtm), the CPI rose 0.34 percent in January, easing from a 0.66 percent mtm rise logged in December 2022.
“This year’s inflation is still relatively high, [...] but if we compare it with December 2022, January’s inflation is shrinking,” Statistics Indonesia (BPS) chief Margo Yuwono said at a press conference on Wednesday.
The city of Kotabaru in Kalimantan recorded the highest inflation rate at 7.78 percent yoy, while Bandung saw the highest inflation in Java at 7.37 percent yoy. That compares to a mild rate of just 3.23 percent in Sorong, West Papua.
Inflation in January was driven particularly by higher prices for food, beverages and tobacco, with BPS registering an annual increase of 5.82 percent for that category. Red chili and bird’s eye chili were the highest individual contributors to inflation with increases of 10.9 percent mtm and 17.85 mtm, respectively, while rice came third at 2.34 percent mtm.
“If we can stabilize the price of food, then [headline] inflation will decrease in the second half [of 2023],” Mandiri economist Faisal Rachman told The Jakarta Post on Wednesday. “We have to anticipate food price hikes, rice in particular,” he added.
