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BI sticks with inflation forecast despite high rice, oil prices
Bank Indonesia is sticking with its inflation forecast for this year, despite the recent surge in rice and oil prices. Accordingly, it sees no reason to change course in its monetary policy.
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A woman carries goods over her head at a traditional market in Surabaya, East Java, on April 5, 2023.
(AFP/Juni Kriswanto)
B
ank Indonesia (BI) has decided to keep its inflation forecast for this year unchanged despite the recent surge in oil prices and soaring prices of rice in both the global and domestic markets.
The central bank has a mandate to keep annual consumer price index (CPI) growth in the range of 2 to 4 percent this year. It estimates that the rate will fall right between those bounds at 3 percent at the end of this year, and that it will drop slightly to 2.8 percent in 2024.
While the high prices of key food and energy commodities have raised concerns around the world, BI confirmed on Thursday that it was holding on to its 3 percent projection.
“Inflation remains under control and low. […] We’re always in contact with the government regarding rice,” BI Governor Perry Warjiyo said in a press briefing on Thursday, following BI’s monthly interest rate meeting.
In August, annual CPI growth stood at 3.27 percent, according to Statistics Indonesia’s (BPS) latest monthly report.
The category of food, beverages and tobacco was the second-largest contributor to the year-on-year increase, with only transportation driving inflation even more.
Rice belongs in that group, and the price of the key staple has risen sharply in Asia over the past few months in a trend attributed to the weather phenomenon El Nino, which has disrupted harvests, and a partial export ban imposed by India, the world’s biggest rice exporter.
