Roller Coaster Inflation Due To Oil And Gas, Sri Mulyani: Indonesia's Handling Is Not Orthodox

Minister of Finance (Menkeu) Sri Mulyani said that the surge in world energy commodity prices, such as oil and gas (oil and gas), had pushed for a significant increase in inflation. According to her, this condition has made inflation in a number of developed countries reach record highs in the last 40 years.

The United States, in the last three decades, inflation has been very low below 2 percent, while Europe is only about 0 percent with mild or even deflation changes. Suddenly, inflation is now under great pressure due to energy prices," he said on the agenda of The 4th International Convention On Indonesian Oil and Gas (ICIOG), Wednesday, September 20.

The Minister of Finance explained that this situation was exacerbated by inflation in the food sector. This combination makes inflation very high in developed countries.

Indonesia itself does not mean that it is not affected by this situation. Pressure also occurs due to energy and food prices. However, we address this in a way that is not orthodox. We do not respond only to monetary policies, namely raising the benchmark interest rate, but we also address issues directly to the center of the problem, such as on the supply and logistics side and the distribution side," he said.

Through this method, continued the Minister of Finance, Indonesia can handle inflation at a relatively moderate level. That is why economic recovery from domestic consumption can continue to occur.

"But of course this strategy has costs, we have to provide subsidies that are a big pressure after the pandemic. Here we have to consolidate fiscal so that the credibility of the state budget can be maintained in the medium to long term," he said.

Currently, the health of the state budget is relatively well maintained. Not many countries can achieve economic recovery accompanied by stability, low inflation, and healthy fiscal consolidation. So this is an achievement (for Indonesia)," said the Minister of Finance.

VOI noted that general inflation (consumer price index / IHK) in August 2023 was 3.27 percent year on year / yoy. This figure is up from July 2023 which is 3.08 percent. However, this figure has been included in the government's target this year which is 3 percent plus minus 1 percent.

To note, inflation has jumped to its highest level in December 2022 which was 5.51 percent due to rising fuel oil prices and food prices.