Controlling Inflation, Government Focuses On Maintaining Competitive Industrial Competitiveness

Illustration (Photo: Doc Antara)

JAKARTA Inflation in August 2024 was recorded at 2.12 percent on an annual basis or year on year (yoy), moving stably driven by a decrease in most food prices.

Head of the Fiscal Policy Agency, Ministry of Finance, Febrio Kacaribu said that controlling food prices is expected to be a positive signal that food prices are increasingly affordable for the community.

Meskipun demikian, Febrio menyampaikan Pemerintah tetap mewaspadai potensi rising yang dapat berdampak pada produksi beras dan horticultura.

"TPIP-TPID coordination continues to maintain price stability and anticipate potential disasters and extreme weather. In addition, effective communication continues to be carried out to support the maintenance of inflation expectations," he said in his statement, Tuesday, September 3.

Meanwhile, based on components, core inflation has increased to 2.02 percent (yoy). This increase is supported by an increase in inflation in clothing and footwear groups, housing, recreation, and personal care (including gold).

In addition, government regulated price inflation (administered price) recorded an increase, which was 1.68 percent (yoy) driven by an increase in non-subsidized fuel and cigarettes prices.

Meanwhile, volatile price inflation (volatile food) continued its downward trend, recorded 3.04 percent (yoy). The decline in food prices was mainly driven by abundant supply along with the harvest period and decreased production costs such as corn feed.

Febrio said several commodities recorded lower prices, including shallots, broiler meat, tomatoes, and broiler eggs.

Meanwhile, the Indonesian Manufacturing Purchasing Managers' Index (PMI) in August 2024 was recorded at the level of 48.9. Febrio said this could not be separated from the decline in the performance of the global manufacturing sector amid pressure from demand.

According to Febrio, the weakening of economic growth in China, the European Region, and America should be further anticipated in the future.

Furthermore, the manufacturing activities of trading partner countries and ASEAN regions also experienced the same challenges, including the United States (48.0) and Japan (49.8).

"Negara tetangga seperti Malaysia dan Australia juga kembali mencatatkan PMI manufaktur yang terkontraksi masing-masing pada level 49,7 dan 48,5," jelasnya.

In the midst of the slowdown in Indonesian PMI, Febrio expressed optimism that it was still maintained with the performance of a number of leading industry in the country as reflected in the food and beverage and pharmaceutical chemistry industry until the second quarter of 2024 consistently growing above 5 percent (yoy).

In fact, according to Febrio, the basic metal industry grew by 18.1 percent in line with the downstream process which is increasingly showing results. However, attention continues to be paid to lagging industry which faces tough challenges.

The labor-intensive industries such as Textiles and Textile Products (TPT) and Footwear are currently facing tough challenges. Not only in terms of export performance, but also competitiveness in the domestic market that has eroded imported products. The government continues to strive to encourage industrial competitiveness like this with various policy mixes. " said Febrio.

As a step to maintain the competitiveness of TPT products, Febrio said that the Government has implemented Safeguard Measures Import Duty (BMTP), including for Clothing and Clothing Assession until November 2024, Curtains, Bed Condensation, and Benang from Sateptic and Artificial Staple Fibers until May 2026.

Furthermore, Cloth and Carpet until August 2027; as well as the application of Anti Dumping Import Duty (BMAD) for Polyester Staple Fiber (benang) products from India, China, and Taiwan until December 2027.

"This policy is intended to protect and increase the competitiveness of the domestic TPT industry which has large labor absorption," he concluded.