June CPI Inflation Remains Low: BI

Infographics on Inflation in June 2020. (Source: Statistics Indonesia).

Central bank Bank Indonesia (BI) has reported that consumer Price Index (CPI) inflation in June this year remained low.

The CPI inflation stood at 0.18 percent month-to-month (mtm), up from 0.07 percent (mtm) one month earlier.

According to BI’s Executive Director of the Communication Department Onny Widjanarko, the trend was influenced by a drop in core inflation and administered prices.

Volatile food inflation, however, saw a rise, he added.

“On an annual basis, CPI inflation in June 2020 stood at 1.96 percent year-on-year (yoy), down from 2.19 percent (yoy) one month earlier,” he said.

Bank Indonesia, according to Onny, is committed to maintaining price stability and strengthening policy coordination with the Central Government and regional governments to keep inflation low and under control below the central bank’s target range of between 3 percent and 1 percent.

Based on its components, Onny continued, low CPI inflation in June was influenced by a core inflation which slowed from 0.06 percent (mtm) in the previous month to 0.02 percent (mtm).

“This trend is mainly affected by commodity deflation of onions, sugar, and gold jewelry amid inflation of rice with rising side dishes. On an annual basis, core inflation was recorded at 2.26 percent (yoy), slowing compared to May 2020 inflation of 2.65 percent (yoy),” he added.

The slowing core inflation, Onny added, was inseparable from sluggish domestic demand due to the COVID-19 pandemic, BI’s policy consistency in directing inflation expectations, low global commodity prices, and maintained exchange rate stability.

“The administered prices group recorded a 0.22 percent inflation (mtm) again, lower than the previous month inflation of 0.67 percent (mtm),” he said, adding that the inflation was due to rising tariffs in transportation after relaxation of operational restrictions on public transport in early June.

On an annual basis, administered prices inflation was observed to rise from 0.28 percent (yoy) in May to 0.52 percent (yoy) in June, he added.

‘The volatile food group inflation stood at 0.77 percent (mtm) after seeing deflation in the previous month 0.50 percent (mtm),” he said, adding that this trend is mainly driven by increased prices of purebread chicken, eggs and coconut.

Onny further said that several commodities such as chilies, garlic, and cooking oil recorded deflation driven by adequate supply thanks to harvest produce and smooth distribution of food amid the large-scale social restrictions (PSBB) policy in a number of regions, as well as low global commodity prices.

“On an annual basis, inflation in the volatile foods group in June 2020 was recorded at 2.32 percent (yoy), lower than inflation in the previous month of 2.52 percent (yoy),” he said. (BI Communication Department/EN)

Translator: Muhardi
Reviewed by: M. Ersan Pamungkas