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Jakarta Post

Inflation rose in August to highest level since December 2017

  • Marchio Irfan Gorbiano

    The Jakarta Post

Jakarta   /   Mon, September 2, 2019   /   02:03 pm
 Inflation rose in August to highest level since December 2017 An employee shows two bars of gold produced by a state-owned diversified mining company, PT Aneka Tambang (Antam). The increase in gold prices partly contributed to the monthly inflation in August. ( Andrew Lotulung)

Indonesia’s annual inflation rate rose in August to its highest level since December 2017, but it remained within the government’s target.

Statistics Indonesia (BPS) announced on Monday that the Consumer Price Index (CPI) rose by 3.49 percent in August, up from the figure recorded in the same month last year and higher than the year-on-year inflation of 3.32 percent in July.

The August inflation was the highest since December 2017 when the annual rate reached 3.61 percent, but it was still within the 2.5 to 4.5 percent target range set by Bank Indonesia for this year and the government’s target of 3.5 percent inflation as assumed by the 2019 state budget.

The monthly inflation rose by 0.12 percent in August, less than the 0.31 percent in the previous month, driven by increases in education tuition fees and commodity prices.

August’s inflation was driven by an increase of spending on education as most schools and universities started a new academic year during the month, BPS head Suhariyanto said in Jakarta on Monday. Inflation in the education, recreation and sports categories rose by 1.21 percent last month, with tuition fee increases in all education levels, from elementary to tertiary, contributing 0.09 percent to the headline inflation.

The uncertainties in the global market, which had prompted investors to switch their portfolios into more secure assets such as gold, also trickled down to influence domestic inflation. The price increase of gold contributed 0.05 percent to August’s headline inflation, while the clothing category – under which the commodity was categorized – inflated by 0.88 percent, making it the second highest inflation driver last month.

“The global economy was still colored with uncertainties, while commodity prices also fluctuated. So, it is reasonable that investors switch to investments deemed much safer, such as gold,” said Suhariyanto.

Foodstuff prices, meanwhile, deflated by 0.16 percent on August, with prices of tomatoes, garlic and chicken, among other commodities, deflated last month. Meanwhile, other commodities such as red chili peppers, bird’s eye chili, fish and potato recorded price increases.

Core inflation stood at 0.43 percent in August, while administered prices and volatile food prices deflated by 0.4 percent and 0.25 percent, respectively, over the same period. (hen)