BI Optimistic Back Inflation To Normal Level Below 4 Percent August 2023

Board of Governors of Bank Indonesia (Photo: Capture BI Youtube screen)

JAKARTA Bank Indonesia (BI) believes that the domestic inflation rate will continue to decline this year. BI Governor Perry Warjiyo said the indication could be seen from the core inflation level which continued to decline to 2.94 percent in March 2023.

Meanwhile, the central bank is still trying to reduce general inflation or inflation based on the Consumer Price Index (IHK), which is currently still 4.97 percent at the end of last month.

"IHK inflation will drop below 4 percent starting September," Perry said during a press conference in Jakarta, Tuesday, April 18.

He explained that the assumption of slowing down inflation was based on the base effect of 2022 which tends to be quite high after the government raised the price of fuel oil (BBM).

"The adjustment of fuel prices has a base effect," he said.

However, Perry sees that there is room big enough to be able to reduce inflation faster than originally estimated.

"The IHK inflation fell faster. Indeed, it is not yet (under) 4 percent, but last month it was close (under) 4 percent (after previously being above 5 percent). Possibly, we believe inflation can be below 4 percent," he said.

For information, Bank Indonesia has set a target for core inflation and IHK inflation of 3 percent plus minus 1 percent this year.

The Central Statistics Agency (BPS) reported that until the close of March 2023, core inflation was recorded at the level of 2.94 percent from the previous 3.09 percent in February 2023.

Meanwhile, IHK inflation was stated at 4.97 percent in March from the previous 5.47 percent in February.