Gov’t, BI to Control 2021 Inflation through Five Measures

Inflation control coordination meeting held online on Thursday (11/2). (Photo by: Coordinating Ministry for Economic Affairs)

Indonesian Government and central bank Bank Indonesia (BI) have stipulated five strategic measures to keep inflation under control in the range of 3.0 ± 1% in 2021.

The strategic measures agreed in the Virtual Coordination Meeting of the Central Inflation Control Team (TPIP) on Thursday (11/2) are as follows:

1. Maintaining volatile food inflation within the range of 3.0 – 5.0% by strengthening four pillars of strategy which includes Price Affordability, Supply Availability, Smooth Distribution, and Effective Communication during COVID-19 pandemic, and maintaining supply and smooth distribution, especially to anticipate high demand ahead of the holy fasting month of Ramadan and Eid al-Fitr in April and May, as well as ahead of other National Religious Holidays (HKBN). Implementation of the strategy is focused on maintaining supply and smooth distribution of goods between regions through utilization of information technology and interregional cooperation.
2. Strengthening coordination of Central Government and regional governments in controlling the inflation through the organization of the 2021 National Coordination Meeting on Inflation Control which adopts the theme “Stimulating Roles of Micro, Small, and Medium-sized Enterprises on Food Sector through Optimizing Digitalization in Order to Support Economic Recovery and Maintain Food Price Stability”.
3. Enhancing synergy among ministries/institutions with the support from regional governments to succeed the TPIP program for 2021.
4. Strengthening national food security by increasing production volume through food estate program, and maintaining smooth distribution of goods through optimization of infrastructure and natural disasters mitigation.
5. Maintaining the Government’s Rice Reserve (CBP) for Supply Availability and Price Stability program to support the implementation of Public Activity Restrictions (PPKM).

Meanwhile, Coordinating Minister for Economic Affairs Airlangga Hartarto pointed out that synergy between the Government and BI in implementing supply availability and price stability programs during the pandemic has managed to keep inflation in the Consumer Price Index (CPI) 2020 under control at 1.68% year-on-year (yoy) and within the range of 3.0 ± 1%.

“The low inflation rate is affected by a drop in domestic demand amidst adequate supply due to the throes of the pandemic,” he said.

In that meeting, the Government and BI have agreed on inflation target for the next three years, namely 3% ± 1% in 2022 and 2023, and 2.5% ± 1% in 2024.

“The target is expected to be met to support national economic recovery and structural reforms,” he added.

In the future, the Government and BI, both at the central and regional levels, are committed to strengthening their synergy in maintaining CPI inflation which is expected to increase people’s purchasing power in the efforts to rebuild the national economy.

“Low and stable inflation is expected to support economic recovery programs and to generate robust and sustainable economic growth towards an advanced Indonesia,” he remarked. (COORDINATING MINISTRY FOR ECONOMIC AFFAIRS PR/UN) (RAS/MUR)