Indonesia Experiences Deflation in May 2024, BI Reveals Thanks to Consistent Monetary Policy

Bank Indonesia (Photo: Antara)

JAKARTA - Bank Indonesia (BI) reported that the Consumer Price Index (CPI) inflation in May 2024 remained within the target range of 2.5 percent plus minus 1 percent.

Based on data from the Central Statistics Agency, CPI inflation in May 2024 recorded deflation of 0.03 percent (mtm), so that on an annual basis it decreased to 2.84 percent (yoy) from the previous month's realization of 3.00 percent (yoy).

Assistant Governor of the Communication Department Erwin Haryono explained that this maintained inflation was the result of consistent monetary policy and close synergy in controlling inflation between Bank Indonesia and the Government (Central and Regional) in the Central and Regional Inflation Control Teams (TPIP and TPID) through strengthening the National Food Inflation Control Movement (GNPIP) in various regions.

"Going forward, Bank Indonesia believes that inflation will remain under control within the target range of 2.5 percent plus minus 1 percent in 2024 and 2025," he explained in his statement, Tuesday, June 4.

Erwin said that core inflation remained stable in May 2024, recorded at 0.17 percent (mtm), lower than inflation in the previous month of 0.29 percent (mtm).

Meanwhile, the lower core inflation was driven by the normalization of demand after the National Religious Holiday (HBKN) period of Eid al-Fitr, amidst the continued increase in global commodity prices.

In addition, the realization of core inflation in May 2024 was mainly contributed by inflation in gold jewelry, granulated sugar, oily cookies, and house rental costs. Annually, core inflation in May 2024 was recorded at 1.93 percent (yoy), increasing from core inflation in the previous month of 1.82 percent (yoy).

Erwin said that the volatile food group recorded deflation in May 2024 of 0.69 percent (mtm), deeper than the previous month's deflation of 0.31 percent (mtm).

According to Erwin, deflation in the volatile food group was mainly contributed by rice, broiler chicken, and cayenne pepper. The decline in food commodity prices was mainly influenced by the ongoing harvest season, as well as the decline in feed prices for broiler chicken meat commodities.

Annually, the volatile food group experienced inflation of 8.14 percent (yoy), down from the previous month's inflation of 9.63 percent (yoy).

"Going forward, volatile food inflation is predicted to tend to decline supported by the synergy of TPIP and TPID inflation control through GNPIP in various regions," he said.

Erwin said that the administered prices group in May 2024 experienced deflation of 0.13 percent (mtm), down from the previous month's inflation of 0.62 percent (mtm).

"Deflation in the administered prices group was mainly contributed by deflation in intercity transportation fares, air transportation fares, and train fares in line with the normalization of fares after the Eid al-Fitr HBKN period," he said.

Erwin explained that further declines were restrained by inflation in machine-made clove cigarettes (SKM) in line with the continued transmission of the increase in tobacco excise. Annually, inflation in the administered prices group was recorded at 1.52 percent (yoy), down from the previous month's inflation of 1.54 percent (yoy).