Manufacturing PMI Starts To Improve, Ministry Of Finance Expects Community Purchasing Power And Maintained Inflation

Manufacturing (Photo: dock. Antara)

JAKARTA - Inflation in September 2024 is maintained in the target range of 2.5 percent plus minus 1 percent, at the level of 1.84 percent (yoy), lower than the previous month 2.12 percent.

Head of the Fiscal Policy Agency, Ministry of Finance, Febrio Kacaribu said the slowdown had continued since April 2024, driven by a decline in most non-subsidized food and gasoline prices. The price of rice that is moving stably and the harvest of horticultural commodities has pushed for another deflation for the fifth month in a row.

Febrio explained that food prices continue to slope to support maintaining food access for the community. The collaboration between the Central Inflation Control Team (TPIP) and the Regional Inflation Control Team (TPID) continues to be strengthened to maintain price stability and prepare to anticipate the risk of potential disasters and extreme weather changes.

According to Febrio, the maintenance of inflation levels until September 2024 is expected to provide a positive signal that people's purchasing power and price stability will be maintained. However, the Government is still aware of the potential for oversupply.

"In addition, the Government will also continue to be on standby in anticipating extreme weather that can cause turmoil in food prices through TPIP and TPID coordination, especially entering the transition period of the season," he said in his official statement, Thursday, October 2.

Meanwhile, in the midst of sloping food inflation, core inflation was recorded to have increased to 2.09 percent (yoy) driven by groups of personal care, education, housing, and recreation. Core inflation which is still maintained is also in line with the trend of increasing consumption credit growth in August by 11.4 percent (yoy).

Meanwhile, volatile food inflation continues to slow down to 1.43 percent which is driven by the abundance of food stocks, especially red chilies and cayenne pepper in various regions due to the harvest season. Inflation of prices regulated by the Government is also recorded to have slowed down to 1.40 percent (yoy), influenced by a decrease in the price of non-subsidized fuel oil (BBM).

Meanwhile, Indonesia's manufacturing activities in September were still in the contraction zone at the level of 49.2 compared to August 48.9. The weakening of global manufacturing performance, as shown by the contraction of manufacturing Purchasing Managers (PMI) for 3 consecutive months, as well as the rampant trade barriers are a factor that also suppresses manufacturing performance.

Febrio said that the factor of concern over China's economic slowdown is still looming, even though the Chinese government has tried to raise market optimism through a significant stimulus package.

"Indonesian manufacturing export opportunities are estimated to be still quite strong, especially the results of downstreaming. This has begun to be indicated from the upward trend in commodity prices such as nickel, crude palm oil (CPO) and coal," he said.

Febrio explained that in the midst of the moderation of the Indonesian PMI level, most of Indonesia's trading partner countries also recorded contractions in manufacturing PMIs, such as the United States (47.0), China (49.3), and Japan (49.6). Meanwhile, several countries have recorded expansion despite slowing down, such as India and Thailand.

"In the midst of global challenges, domestic manufacturing performance shows improvement even though it is still in the contraction zone. We still maintain optimism to achieve economic growth targets," he said.

Febrio said that in the future, the Government will continue to evaluate policies and anticipate various global challenges to achieve inclusive and sustainable growth.