BI Says Low Inflation Due To Not Strong Domestic Demand

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) responded to the inflation report so far this year which was perched at the level of 1.87 percent year-on-year. According to the central bank, the Consumer Price Index (CPI) inflation in 2021 will remain low and below the target range of 3 percent plus/minus 1 percent.

"The low inflation is influenced by domestic demand that has not been strong as a result of the COVID-19 pandemic, adequate supply, and the synergy of Bank Indonesia and government policies at the central and regional levels in maintaining price stability," said Head of BI Communications Department Erwin Haryono in a statement. press statement quoted Tuesday, January 4.

Erwin added that Bank Indonesia's policy was to consistently maintain anchored inflation expectations according to the target and exchange rate stability in line with its fundamentals. He said that if volatile food inflation was controlled at 3.20 percent yoy, it was supported by the availability of supplies and the smooth distribution of food ingredients that were maintained.

Meanwhile, administered prices inflation increased from last year to 1.79 percent yoy, in line with the increase in public mobility after the easing of the mobility restriction policy.

"Going forward, Bank Indonesia will consistently maintain price stability and strengthen policy coordination with the government, both at the central and regional levels, in order to maintain inflation within the target range of 3 percent plus/minus 1 percent in 2022," Erwin concluded.