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RI sees monthly deflation in June as prices normalize
Statistics Indonesia (BPS) reported a drop in consumer prices in June, reversing part of the seasonal increase seen in May. On an annual basis, the consumer price index (CPI) was up 1.33 percent, lower than a month earlier and below estimates.
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onsumer prices declined in June as food and transportation prices normalized after the peak spending period for Ramadan and Idul Fitri in April and May.
Statistics Indonesia (BPS) reported monthly deflation of 0.16 percent in June, reversing much of the 0.32 percent increase seen in May. On an annual basis, the consumer price index (CPI) was up 1.33 percent, also less than a month earlier.
“The deflation in June occurred because it followed Ramadan and Idul Fitri,” newly appointed BPS head Margo Yuwono said in an online press briefing on Thursday. “The COVID-19 pandemic has affected people’s purchasing power, but we see that it was maintained in June, since core inflation was still growing, albeit just a little.”
Last year, Indonesia saw consumer prices fall for three consecutive months from July through September, when restrictions to curb the coronavirus were tightened in many parts of the country.
Read also: Inflation remains low despite Ramadan, Idul Fitri driving demand for food, transportation
The food, beverage and tobacco category posted the highest monthly deflation at 0.71 percent and was also the largest contributor to the monthly decline in the CPI. Red chili, chicken meat, cayenne pepper, shallots, beef and chicken were the main commodities causing the deflation.
The second-largest contributor to deflation was transportation, where prices dropped 0.35 percent month-to-month (mtm). Airfares, intercity land transportation prices and train fares fell in June, offsetting a rise in car prices.
Core inflation, which excludes volatile prices as well as administered prices, was 0.14 percent mtm, while administered and volatile prices dropped 0.21 percent and 1.23 percent, respectively, in the month of June. Energy prices rose by a marginal 0.01 percent mtm.
The CPI in June was slightly lower than forecast by state-owned publicly listed Bank Mandiri, the largest lender in the country by assets, which had predicted a 0.10 percent mtm decrease and annual inflation of 1.39 percent.
The bank revised down its inflation forecast for the full year to 2.28 percent from 2.92 percent, although it maintained its expectation that inflationary pressure would pick up in the second half of the year.
This is in line with the producer price inflation, which continued to be higher than consumer price inflation, and the increase in the money supply as a result of stimulus measures.
“The recent rise in daily COVID-19 cases also may weaken demand at the beginning of the second half of the year, thus easing demand-pull inflation potential to some degree,” Bank Mandiri chief economist Andry Asmoro wrote in a preview note released on Thursday.
