Airlangga Says Indonesia's Inflation in 2023 is Better than Japan to Argentina

Coordinating Minister for the Economy Airlangga Hartarto (Photo: dock. Antara)

JAKARTA - The government announced that CPI inflation in December 2023 was recorded at a low level of 0.41 percent (mtm), so that 2023 CPI inflation was 2.61 percent (yoy) or decreased compared to the realization in 2022, which was 5.51 percent (yoy).

Coordinating Minister for Economic Affairs Airlangga Hartarto said that this achievement was also better than the realization of inflation in a number of countries which were still above their targets, including Japan (2.8 percent yoy), the United States (3.1 percent yoy), South Korea (3, 2 percent yoy), and Germany (3.2 percent yoy). Next are England (3.9 percent yoy), Russia (7.5 percent yoy), Turkey (62.0 percent yoy), and Argentina (160.9 percent yoy).

Airlangga said that the realization of inflation in 2023 was the lowest since 2000 and Indonesia's inflation achievement in 2023 was maintained stable and under control within the target range of 3 percent plus minus 1 percent.

"This achievement cannot be separated from the strong coordination and synergy of various parties through TPIP-TPID in controlling price fluctuations amidst still high uncertainty, one of which is weather disruption from El Nino," he said in his official statement, Thursday, January 4.

Airlangga said that inflation developments in December 2023 were influenced by the movement of all inflation components. The government-regulated prices (AP) component experienced inflation of 0.39 percent (mtm), or 1.72 percent (yoy).

On a monthly (mtm) and annual (yoy) basis, air transportation rates, filtered kretek cigarettes, and white kretek cigarettes are commodities contributing to CPI inflation in December 2023. Meanwhile, core components experienced inflation of 0.14 percent (mtm), or 1.80 percent (yoy). On an annual basis, core inflation is still maintained even though it is in a sloping trend.

Furthermore, based on Trading Economics records, Indonesia's core inflation realization is one of the lowest, ranking 10th out of 86 countries. The volatile food price component (VF) experienced a recorded increase of 1.42 percent (mtm) or 6.73 percent (yoy).

Airlangga said that weather disturbances due to El Nino caused food production, especially rice and various chilies, to be less than optimal. This has pushed up the prices of rice and chilies, making these two commodities the main contributors to inflation throughout 2023.

The government continues to make various efforts to maintain the availability of food supplies and maintain price affordability, including by strengthening government food reserves, especially rice, distributing medium rice through the Stabilization of Food Supply and Prices (SPHP) program, as well as distributing rice food aid.

As of December 31, 2023, CBP remained maintained at 1.3 million tonnes, in line with the Government's target of 1.2 million tonnes. Meanwhile, SPHP distribution until December 30 2023 reached 1.2 million tons or 110.3 percent of the target.

As of December 30, 2023, the distribution of rice food aid in order to maintain the purchasing power of the poor and vulnerable for the September-December period alone had been distributed at 852.33 thousand tons or 99.82 percent of the target.

The government is also implementing a food mobilization program by facilitating food distribution. Food commodities that have been realized are 2.54 thousand tons, with the highest realization being corn, soybeans, and rice.

Furthermore, the Government is also massively implementing the Cheap Food Movement (GPM) program which is coordinated by the National Food Agency at 1,626 locations in 36 provinces and 324 districts/cities. Meanwhile, similar programs such as Cheap Market Operations have also been implemented by 448 Regional Governments to curb price fluctuations in the regions.

Airlangga said that various policy programs that were synergized by the Government (Central and Regional) were able to prevent further increases in food prices. In the future, the government will continue to be alert and monitor domestic and global phenomena that could have an impact on inflation.

"In the midst of the various challenges currently being faced, including increasingly stringent inflation targets, the joint commitment and synergy of all parties, including the Central Government, Regional Government, and Bank Indonesia, will continue to be strengthened in order to keep inflation stable and under control within the target range," concluded Airlangga.