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View all search resultsInflation down despite oil price surge, Idul Fitri demand spike
Inflation in Indonesia has slowed down in March despite surging global oil prices and elevated demand over the Idul Fitri holidays, but analysts warn of rising inflationary pressure as the Iran war drags on.
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Motorcycle riders line up at a gas station on March 9 in Surabaya, East Java. (AFP/Juni Kriswanto)
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nflation in Indonesia has slowed down despite surging global oil prices and elevated demand over the Idul Fitri holidays, but analysts warn of rising inflationary pressure as the Iran war drags on.
Statistics Indonesia (BPS) revealed in a press conference on Wednesday that annual consumer price index (CPI) growth dropped to 3.48 percent in March from 4.76 percent in February, landing back within Bank Indonesia’s (BI) target range of 2.5 plus/minus 1 percent.
BPS official Ateng Hartono noted that the unusually high February rate had been partly due to a “base effect”, referring to a statistical distortion on account of a temporary electricity discount that had pushed CPI down below normal levels in last year’s first two months, thereby making the gap to this year’s first two months particularly wide.
The commodities BPS groups into the “housing, water, electricity and household fuel” category were up 7.24 percent year on year (yoy) in March, while the “personal care and others” group, which includes gold jewelry, saw even higher inflation of 15.32 percent yoy.
Notwithstanding a recent drop, the gold price was still much higher in March than it had been a year earlier, Ateng explained, thereby acting as a driver of inflation.
The conflict in the Middle East, sparked by coordinated attacks by the United States and Israel on Iran on Feb. 28, has significantly pushed up global oil and gas prices, yet BPS recorded a 1.03 percent yoy decline in domestic fuel prices, which are somewhat shielded from global market pressures by government subsidies.
BPS does not differentiate between subsidized and unsubsidized fuels in its inflation report.
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