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Record-low inflation sparks worry over household spending
Last year’s inflation of 2.72 percent is the lowest since 1999, when the CPI increased by 2.13 percent.
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Economic value: A buyer purchases a product from a vendor at Poncol Market, Central Jakarta, in this undated photo. (JP/Narabeto Korohama)
I
ndonesia’s decade-low inflation rate has sparked concern among several economists that the key indicator foreshadows a further weakening of the national economy.
The consumer price index (CPI) rose just 2.72 percent in 2019, the lowest full-year rate since 2012, which is when Statistics Indonesia began recording the index with the current methodology in 82 selected cities.
On a longer timescale, last year’s inflation is the lowest since 1999, when the CPI increased by 2.13 percent.
“[Looking at the data], I conclude that, first, prices were under control, secondly, administered prices had little impact on headline inflation and third, we do need to be extra-careful with this slowing [core] inflation,” BPS head Suhariyanto told a press conference in Jakarta on Thursday.
Administered prices only rose by 0.51 percent in 2019, a far cry from the 3.36 percent increase recorded in 2018 when the government hiked fuel prices and airlines lifted their airfares.
Meanwhile, core inflation increased by 3.02 percent last year, up slightly from 3.07 percent in 2018. Volatile food inflation was 4.3 percent last year, higher than the 3.39 percent a year before.
The full-year headline figure is far below the government’s target of 3.5 percent stated in the 2019 state budget but still within the central bank’s target range of between 2.5 percent and 4.5 percent.
