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Jakarta Post

Indonesia to maintain low inflation to boost consumer spending

  • News Desk

    The Jakarta Post

Jakarta   /   Wed, August 9, 2017   /   06:01 pm
Indonesia to maintain low inflation to boost consumer spending Finance Minister Sri Mulyani Indrawati (Antara/Puspa Perwitasari)

The government has promised to keep inflation low during the rest of the year so that consumer spending, the main driver of the country’s economic growth, will increase in the second half of this year.

Finance Minister Sri Mulyani Indrawati said that with a low inflation rate during the remaining months of this year, consumer spending would increase and could in turn help boost economic growth.

The latest data from the Central Statistics Agency (BPS) show consumer spending growth slowed to 4.95 percent year-on-year in the second quarter of this year from 4.94 percent recorded in the first three months of 2017.

Read also: Bank Indonesia happy with July inflation

Indonesia's annual inflation rate declined 3.88 percent in July from 4.37 percent in June.  The July inflation was lower than most analysts’ forecasts.

“With the low inflation in July, which is below the government’s initial estimate of 4 percent, consumer spending has the space to grow in the third and fourth quarter,” Sri Mulyani said, on Tuesday.

Sri Mulyani said the government would also accelerate implementation of several social-aid programs, such as the Family Hope Program (PKH) and rice social assistance (Rastra) to increase the buying power of lower-income families.

She added that the disbursement of village funds was another government program that needed to be optimized to empower the rural economy. “We will focus on [the village fund program’s] impact and design so that the program really yields results,” she said. (mrc)