Once in a year, Bank Indonesia (BI) and the government invite all regional leaders to attend a national coordination meeting, aiming at ensuring they are on the same page when it comes to keeping the consumer price index in check.

Balanced inflation would benefit both consumers and producers, said Kalla, who is a businessman himself. While soaring inflation would cripple the economy, muted inflationary pressure would discourage producers from expanding their businesses because of a lack of demand.

“Inflation is like the blood pressure. We could collapse if our [blood pressure] is too high,” he went on to say. “If the inflation is low or if we even record deflation, we could collapse as well.”

Benign inflation would be tolerated by the government as it would act as an incentive for producers due to the expectation of increased demand going forward, Kalla said, adding that ensuring a smooth distribution of goods would be key in maintaining a price equilibrium that would benefit producers and consumers at the same time.

Indonesia’s consumer price index rose by 0.55 percent month-to-month (mtm) in June and 3.28 percent year-on-year (yoy), according to Statistics Indonesia (BPS). The annual figure was well within BI’s inflation target range of between 2.5 percent and 4.5 percent in 2019.

The government expects to maintain inflation at 3.5 percent this year, as stipulated in the 2019 state budget.

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