TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Inflation lowest in 20 years despite increasing food prices
In addition to government efforts to maintain domestic prices, declining inflation in 2023 was partly influenced by easing global commodity prices and milder El Niño impacts.
Change Size
Sowing machine: A farmer uses a machine to plant rice seedlings on Dec. 25, 2023, in Parigi Moutong regency, Central Sulawesi. The government has been pushing for a greater use of agricultural technology to boost rice production. (Antara/Mohamad Hamzah)
I
ndonesia has logged the lowest annual consumer price index (CPI) growth in the last two decades despite a trend of increasing prices for some food commodities throughout the year, partly because of government intervention, but also favorable external conditions.
The country saw its annual inflation hover at 2.61 percent at the end of 2023, according to Statistics Indonesia (BPS) on Tuesday, which the agency noted was the lowest in 20 years, discounting figures from during the pandemic of 1.68 percent and 1.87 percent in 2020 and 2021, respectively.
The figure was well below market expectations, as Moody's Analytics projected 3 percent and state-owned lender Bank Mandiri predicted 2.7 percent.
Acting BPS head Amalia Adininggar told reporters on Tuesday that last year’s inflation was partly the result of a base effect triggered by high inflation in the previous year. Amalia also pointed out that a similar trend also occurred in 2005, 2008, 2013 and 2015.
Indonesia hiked subsidized fuel prices in September 2022 amid a surge in the international oil price and a depreciated rupiah. This prompted inflation to peak at nearly 6 percent before gradually decreasing over time.
Higher CPI growth brought on by shocks created a high base effect in that year, which in turn would make figures in the next year seem smaller, which according to Investopedia could be perceived as a statistical distortion.
Regardless, December’s low inflation figure “is good”, especially when compared with those of other countries, said Finance Minister Sri Mulyani Indrawati.
