TPIP and TPID Collaboration Able to Reduce the National Inflation Rate

Illustration (Photo: Doc. Antara)

JAKARTA - LPEM FEB UI Macroeconomic and Financial Market Economist Teuku Riefky assessed that the extra effort to control inflation carried out by the Central Inflation Control Team (TPIP) and the Regional Inflation Control Team (TPID) was quite good when compared to other countries.

Indonesia's national inflation was recorded at 5.51 percent. While several countries experienced extreme inflation spikes, for example, Argentina reached 94.80 percent, Turkey 64.27 percent, Russia 11.9 percent, and Italy 11.6 percent.

Even so, said Riefky, for several regions there are still supply and season issues so that further strengthening is needed.

"So far the progress has been quite good in controlling Indonesia's inflation which, although high, is still far more manageable than other countries," said Riefky, Wednesday, January 18.

For inflation in the first quarter of 2023, Riefky estimates it will still be at 5 percent. This is because there is a moment in the month of Ramadan or fasting.

"Our estimate is still above 5 percent, maybe in the range of 5.2 to 5.4 percent because in Q1 there is still a seasonal factor for the fasting month. So there is still upward inflationary pressure even though the trend is declining," said Riefky.

Therefore, Riefky said that to control inflation, the government must maintain the domestic economy and also the exchange rate. According to Riefky, Indonesia's inflation this year will be in the range of 4 percent to 5 percent on an annual basis or year on year (yoy).

The prediction is still in line with the government's target. Where the government is targeting the inflation rate in 2023 to reach the target of 2 to 4 percent assuming the 2023 State Budget is 3.6 percent.

Previously, President Joko Widodo (Jokowi) reminded Perum Bulog to control rising rice prices in 79 regions.

On the other hand, the Coordinating Minister for the Economy Airlangga Hartarto said that there were 23 provinces whose inflation rate was above the actual national inflation.

"This is a record, West Sumatra's inflation is 7.43 percent; Southeast Sulawesi 7.39 percent; South Kalimantan 6.99 percent; Riau 6.81 percent and other regions. So for these 23 provinces, the Governor please pay attention, "said Airlangga.

Food Commodity Balance Sheet Must Be Clear and Accurate

Meanwhile, an economist from Jember University (Unej) Adhitya Wardhono revealed that rice always becomes a polemic every year. Especially at the end of 2022, Indonesia had imported rice. Rice commodity is a food commodity whose price needs to be monitored.

Therefore, said Adhitya, the commodity balance applied by the National Food Agency (BPN) must be clear and precise and able to coordinate with relevant stakeholders in a more progressive manner.

"This commodity is still the main commodity contributing to inflation in January 2023. Referring to information from BI (2023), at least rice is one of the four food commodities contributing to inflation, apart from cayenne pepper, red chili and shallots," he said.

According to Adhitya, TPIP-TPID must collaborate to monitor and ensure the movement of rice commodities. They also have to go to markets to ensure that the national rice stock is sufficient.

"If it is felt that there are price movements that can disrupt people's purchasing power, especially the underprivileged and trigger inflation, strategic cross-agency policies need to be implemented," he said.

Adhitya assessed that price control strategies such as market operations and bargain markets were needed in the short term.

Especially now that Indonesia is trying to recover from the pandemic, so it needs continuity and consistency to control food inflation.

“Society is still experiencing economic bruises due to the pandemic. Therefore, the operation of a cheap basic food market, especially rice, can at least reduce the shock of rising food prices in the short term," he added.

However, Adhitya emphasized the importance of long-term policies. This is because a low-cost market strategy or market operation has the potential to cause moral hazard in the market when carried out in the long term.

Such as increasing rice productivity extensively; institutional arrangements between related institutions; cultivating superior seeds that are resistant to climate change and pests; food distribution system that needs very tight coordination between stakeholders.

"So in relation to volatile food inflation, the pattern of reducing food inflation by coordinating between state institutions and the government is an important agenda that must be carried out early this year," he said.