Bank Indonesia Claims Inflation Is Still Safe Even Though It Continues To Crawl

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) responded to a report from the Central Statistics Agency (BPS) which released information that the inflation rate in May 2022 on an annual basis (year on year / yoy) was 3.55 percent.

Head of BI Communications Department Erwin Haryono said that this figure was higher than inflation in the previous month which was 3.47 percent yoy.

"Inflation was maintained amid increasing domestic demand, supported by maintained exchange rate stability, and the consistency of Bank Indonesia's policies in guiding inflation expectations," he said in a press statement quoted on Friday, June 3.

According to Erwin, month-to-month (mtm) inflation in May was recorded at 0.40 percent or lower than April's 0.95 percent. He said this development was influenced by the decline in inflation in all groups, namely core, volatile food and administered prices.

Then, in terms of core inflation, it is known that it was 2.58 percent yoy or lower than the previous month which was 2.60 percent.

"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 keep inflation within the target range of 3 percent plus minus 1 percent," said Erwin.

Previously, Bank Indonesia had predicted that this year's inflation rate would exceed 4 percent. This means that the government's target of 3 percent plus minus 1 percent will be missed.

However, the monetary authority believes that the inflation rate will return to the psychological level of 3 percent in the next 2023 period.