Indonesias 2016 Inflation Rate Lowest in Past 7 Years
Date 27 Juli 2017
President Joko Jokowi Widodo expressed his gratitude following a report by the Governor of Bank Indonesia (BI), which shows Indonesias inflation rate in 2015 stood at 3.35 percent. Then, in 2016 at 3.02 percent, and in the first quarter of 2017 was in the range of 4 percent. The final inflation rate in 2016 was 3.02 percent, the lowest in 7 years.
“The catch is, Indonesia has entered the era of low inflation. This is owing to all of you who know very well what the function of inflation is,” President Jokowi said at the Opening of National Coordination Meeting (Rakornas) on the 2017 Inflation Control, at Grand Sahid Jaya Hotel, Central Jakarta, Thursday (27/7) morning.
The achievement of very low inflation rate, according to the President, occurred first because of information issues. He mentioned that over the past years, a lot of networks, facilities, and procedures have been built to disseminate information. “So that all markets can see the prices, I think it is very good. Regarding the price of basic foods, so the farmers know the price in a market, and the other market knows the information. It is very important to disseminate information on prices in various regions,” the President said.
Second, President Jokowi admitted that the information is more accurate and real time that enables prompt response if the prices change so quickly. The President added that if there is a certain expensive item somewhere but cheaper elsewhere, it can be quickly shipped from the cheap to the expensive area so the price will be stable again. “It means that the key to the supply is the distribution which is very important,” the President said.
Third, the organizational culture. President Jokowi said the organizational culture in various government institutions is now increasingly paying intensive attention to inflation, price stability. It is now common in areas that the price spike is something that all of us cannot put up with.
“Previously, when the price rose, it was considered an ordinary thing. Now, when the price rises, we put up with consider it as an unusual thing. It has become an organizational culture that we have to continue,” the President said, adding this is a matter of mentality, mindset, and management.
The President believes that if all of us are aware of it, we will find it not too difficult to solve problems. It is because, the President continued, when it comes to inflation, people tend to accept it as it is and they do nothing.
According to the President, it has become a public perception at the time that the inflation rate of 8, 9, 10 percent is something reasonable, ordinary.
The President gave an example that in other countries, such as in Europe, inflation can be very low at 1 percent, 2 percent because they do something.
“We have also realized that this inflation can cause many things. One of them is high bank interest due to inflation that we cannot suppress. However, as soon as we suppress the inflation in the course of 4, 5, 6, 7 years, bank interest will automatically decrease,” the President said.
If inflation continues to be suppressed, President Jokowi believes it will benefit people. The President reminded the public that it is useless should the economic growth, for example, is 6 percent, but inflation is 9 percent, the people will incur losses. Later on, the President continued, it is expected that inflation rate can gradually be under 3 percent, 2 percent. That, according to the President, will affect more things.
“Once again, people in developing countries tend to ignore such a small thing. Well, the difference is just zero point something, why fuss? I heard things like that,” the President continued.
President Jokowi reminded us that it is part of the work ethic, the discipline to appreciate the small things, the small money, and it is an efficiency savings that will produce substantial benefits, very dramatic on the power base and eventually enter into the base price. “That is a very important part in the cost structure of an economy,” President Jokowi said.
The event was attended by Bank Indonesia Governor Agus Martowardojo, Coordinating Minister for Political, Legal, and Security Affairs Wiranto, Coordinating Minister for the Economy Darmin Nasution, Coordinating Minister for Maritime Affairs Luhut B. Pandjaitan, Cabinet Secretary Pramono Anung, Minister of Trade Enggartiasto Lukita, Minister of Transportation Budi K. Sumadi, Minister of National Development Planning/Head of National Development Planning Board (Bappenas) Bambang Brodjonegoro, Minister of Manpower Hanif Dhakiri, Minister of Agriculture Amran Sulaiman, Minister of Home Affairs Tjahjo Kumolo, Minister of Marine Affairs and Fisheries Susi Pudjiastuti, and the National Working Group of Inflation Control Team throughout Indonesia. (FID/JAY/ES) (MUR/YM/Naster).