Indonesia Deflation 4 Months In A Row, BPS: Not A New Phenomenon

Inflation of deflation of illustrations (Photo: Unsplash)

JAKARTA - The Central Statistics Agency (BPS) recorded that the inflation rate as reflected in the Consumer Price Index (IHK) in August 2024 has continued to decline in the last four months.

Deputy for Distribution and Services Statistics Center for Statistics (BPS) Pudji Ismartini explained that monthly or month to month (mtm) deflation in August 2024 was 0.03 percent in line with the decline in IHK from 106.09 in July 2024 to 106.06 in August 2024.

"This August 2024 deflation is lower than July 2024 and is the fourth deflation in 2024," he said at a press conference, Monday, September 2.

"The phenomenon of deflation in Indonesia is not a new phenomenon," he added.

Pudji explained, this is not new because similar conditions have occurred after the Asian financial crisis, so that Indonesia experienced deflation for 7 consecutive months from March to September 1999 as a result of exchange rate depreciation and a decrease in a number of goods prices.

"Then another deflation period that occurred in December 2008 and January 2009 during the global financial crisis. Then deflation due to the decline in world oil prices and also due to weakening domestic demand," he explained.

Then, Pudji said that there was a deflation of 3 consecutive months in July 'September 2020 due to a decrease in purchasing power at the beginning of the Covid-19 pandemic. A number of commodity groups experienced deflation, in which four groups of expenditures experienced deflation, namely food, beverages and tobacco, clothing and footwear, transportation, information, communication and financial services.

"With these four groups, it indicates that the decline in purchasing power in 2020 will be in the early period of the COVID-19 pandemic," he explained.

Therefore, Pudji conveyed that this series of four months of deflation was not due to the weakening of people's purchasing power but in terms of supply (supply).

"This four-month deflation phenomenon is shown more in terms of supply, where the harvest of several commodities of food crops, holticulture and decreased production costs such as in livebird also decreased the price of flat corn for animal feed materials, which encourages deflation of broiler eggs and broiler meat, this means that deflation is still happening on the supply side," he explained.