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Prolonged drought threatens food supplies, inflation
Food commodities have consistently been the largest contributor to increases in consumer prices in Indonesia, given that a large portion of household spending accounts for more than half of the country’s gross domestic product (GDP).
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Although the dry season will reach its peak in August, its impacts have already been felt across the country. (JP/Seto Wardhana)
Experts have urged the government to boost efforts in managing food supplies following warnings that this year’s prolonged dry season may impact the availability of certain commodities and ultimately, consumer prices.
Food commodities have consistently been the largest contributor to increases in consumer prices in Indonesia, given that a large portion of household spending accounts for more than half of the country’s gross domestic product (GDP).
In July, food prices rose 0.8 percent month-on-month (mom0 and contributed 0.17 percent to inflation, Statistics Indonesia (BPS) revealed on Thursday. The commodities recorded a 4.85 percent annual inflation, higher than the headline inflation of 3.32 percent year-on-year (yoy).
“Last year’s dry season was manageable, because the government kept tight supervision on volatile food stocks,” Institute for Development of Economics and Finance (Indef) economist Nailul Huda told The Jakarta Post. “But this year, the government estimates that the dry season will affect 28 provinces, so there will be a significant depletion of supplies.”
Huda was referring to data from the Office of the Coordinating Human Development and Culture Minister on Monday that further said this year’s dry season would affect over 11 million hectares of land and 48.5 million people.
The drought is estimated to reach its peak this August before ending in October, posing a serious threat to harvesting seasons and thus, food supplies.
