Economists Ask Government To Create More Jobs To Maintain People's Purchasing Power

JAKARTA - Economist from the University of Indonesia (UI) Teuku Riefky asked the government to create more jobs in order to restore people's purchasing power.

This, he said, is because people's purchasing power is still low in the midst of the current high benchmark interest rate of Bank Indonesia or BI rate which has the potential to further suppress public consumption.

"To mitigate from this condition, of course, the government needs to increase productivity and create jobs," said Teuku Riefky as quoted by ANTARA, Tuesday, January 7.

The high BI rate, he continued, and relatively low food commodity prices caused inflation in 2024 to become the lowest annual inflation recorded by the Central Statistics Agency (BPS).

"Combination of these things with the Indonesian economy in the future is actually not too good, because this will affect economic growth," said Riefky.

Even though it can reduce public consumption, he said, the Bank Indonesia's decision to maintain interest rates at the level of 6 percent is what is needed.

This is because Bank Indonesia has a mandate to maintain price levels and stability of the rupiah exchange rate.

"Well, currently the rupiah is very depressed, so BI's focus is indeed on maintaining more important rupiah stability at this time," he added.

BPS recorded an increase in the Consumer Price Index (IHK) in December 2024 by 0.44 percent month to month (mtm), bringing the 2024 IHK inflation on an annual basis to 1.57 percent year on year (yoy).

This figure is still within the government's target range of 2.5 percent plus minus 1 percent.

The annual inflation in December 2024 was mainly driven by food, beverage and tobacco groups that recorded inflation of 1.9 percent and contributed 0.55 percent to general inflation.

In this group, the main commodities that contribute to inflation are machine kretek cigarettes with a share of 0.13 percent, and cooking oil with a share of 0.11 percent.

Other commodities that contributed were rice, powdered coffee, shallots, fresh fish, broiler meat, and garlic.

Meanwhile, the Meeting of the Board of Governors (RDG) of Bank Indonesia (BI) on 17-18 December 2024 decided to keep the BI rate at the level of 6 percent.