BI Welcomes Inflation Reduction: Faster Than Previous Estimates

JAKARTA - Bank Indonesia (BI) stated that inflation in April 2023 remained under control amid the period of Eid Al-Fitr National Religious Holidays (HBKN).

Head of the BI Communication Department Erwin Haryono said that based on data released by the Central Statistics Agency (BPS), general inflation was recorded last month's Consumer Price Index of 4.33 percent year on year (yoy).

"This figure is down from February 2023 which is 4.97 percent," he said in a press statement quoted on Wednesday, May 3.

According to Erwin, this development is inseparable from the response to Bank Indonesia's preemptive and forward looking monetary policy.

In addition, the close synergy of inflation control between Bank Indonesia and the Central Government, Regional Government, and other strategic partners in the Central and Regional Inflation Control Team (TPIP and TPID) through strengthening the National Movement for Food Inflation Control (GNPIP) program in various regions.

"In the future, Bank Indonesia believes core inflation will be more controlled in the range of 3 percent plus minus 1 percent in the remainder of 2023 and IHK inflation can return to the target of 3 percent plus one percent earlier than previously estimated," he said.

Erwin detailed that core inflation was said to be 2.83 percent yoy or more sloping than the previous month which was 2.94 yoy. Meanwhile, monthly (month to month/mtm), core inflation in April 2023 increased to 0.25 percent from 0.16 percent previously in March 2023.

This increase (monthly core inflation) is in line with the increase in seasonal demand for the Eid al-Fitr HBKN period amid declining global commodity price pressures. The main commodity contributing to core inflation is the gold jewelery commodity," he said.

Then from the volatile food price group (volatile food) it was recorded to have fallen to 3.74 percent yoy from the previous 5.83 percent. On a monthly basis, it is relatively stable at 0.29 percent both in March and February 2023.

Meanwhile, the price regulated by the government (administered prices) fell to 10.32 percent yoy (previously 11.56 percent) and rose on a monthly basis to 0.69 percent mtm (previously 0.12 percent).

It should be noted that BI is very concerned about inflation, especially core inflation, because it affects the policy of the benchmark interest rate to regulate the circulation of money and stability of the rupiah exchange rate.

"Bank Indonesia will continue to strengthen coordination with the Government (Center and Region) in controlling inflation," concluded Erwin.