Bank Indonesia Glad Inflation Dropped Faster Than Initial Estimation

BI Governor Perry Warjiyo (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) reports that the current inflation rate has declined faster than expected.

BI Governor Perry Warjiyo said inflation based on the Consumer Price Index (CPI) at the end of 2022 was recorded at 5.51 percent (yoy).

This figure is far lower than the consensus forecast of 6.5 percent after the subsidized fuel price (BBM) adjustment in September 2022.

Likewise, core inflation will be low at the end of 2022, which is 3.36 percent, lower than the forecast of 4.61 percent.

"The decline in CPI and core inflation was the result of very close coordination between the government and Bank Indonesia through a front-loaded, pre-emptive, and forward-looking monetary policy response," he said on Thursday, January 19.

According to Perry, his party is controlling inflation, especially for volatile foods through the National Food Inflation Control Movement (GNPIP).

"Going forward, Bank Indonesia believes core inflation will remain within the range of 3 percent plus minus 1 percent in the first semester of 2023, and CPI inflation will return to within the target of 3 percent plus minus 1 percent in the second semester of 2023," he said.

On this occasion, Perry also announced an increase in the benchmark interest rate by 25 basis points (bps) to 5.75 percent.

"Bank Indonesia will continue to strengthen the monetary policy response, and continue to coordinate with the government to ensure that inflation is reduced and controlled," BI Governor Perry Warjiyo concluded.