Coordinating Minister Airlangga: September Inflation Still Under Control

Coordinating Minister for Economic Affairs Airlangga Hartarto. (Photo: Doc. Antara)

JAKARTA - Coordinating Minister for Economic Affairs Airlangga Hartarto assessed that Indonesia's inflation in September 2024 was still under control at 1.84 percent annually (yoy), or lower than August 2024 at 2.12 percent (yoy).

This realization is still within the target range set at 2.5 plus minus 1 percent.

"This achievement reflects the various steps taken by the government, including optimizing low-cost market operations, facilitating food distribution, distributing food aid, developing food kiosks, and cooperation between regions have succeeded in maintaining price stability, especially for food commodities," said Airlangga in his statement in Jakarta, quoted from Antara, Monday, October 7.

On a monthly basis, September 2024 saw the fifth consecutive deflation. This month's deflation was recorded at 0.12 percent (mtm).

Monthly deflation in September 2024 was mainly caused by a decrease in prices in volatile food (VF) components which experienced deflation of 1.34 percent (mtm) and a decrease in government-regulated price components, especially the decrease in fuel prices.

The decrease in prices of several food commodities, such as red chilies, cayenne peppers, chicken eggs, chicken meat, and tomatoes was driven by the ongoing harvest season in several production center areas.

On an annual basis, the volatile price component still experienced inflation of 1.43 percent (yoy), within the target of below 5 percent according to the results of the 2024 Central Inflation Control Team (TPIP) high-level meeting (HLM).

The core component reflecting people's purchasing power experienced inflation of 0.16 percent (mtm) or 2.09 percent (yoy).

Airlangga said the increase was mainly influenced by the increase in the price of ground coffee in line with the increase in world coffee prices and the cost of academies or universities because the new school year is still ongoing.

The increase in core inflation is also in line with the trend of increasing public spending as reported in the Latest Public Spending Development report by Bank Mandiri in September 2024.

"This shows that the public still has strong purchasing power which supports the momentum of economic growth," he said.

Meanwhile, the price component regulated by the Government (administered prices/AP) experienced deflation of 0.04 percent (mtm) or inflation of 1.40 percent (yoy), mainly contributed by the decline in gasoline commodity prices.

Pertamina has lowered the price of non-subsidized fuel in September 2024 and will continue until October 2024. However, AP inflation is still restrained due to the commodities of Machine-Made Clove Cigarettes (SKM) and air transportation.

Rating and Investment Information, Inc. (R&I) also affirmed Indonesia's Sovereign Credit Rating at BBB+ with a positive outlook.

"This confirms international confidence in Indonesia's economic prospects, which are projected to grow in the range of 5.0-5.2 percent in 2024. The synergy between the Government and Bank Indonesia has succeeded in maintaining price stability and providing a strong foundation for sustainable economic growth," explained Airlangga.

In addition, the challenge of the global economic slowdown has also affected domestic economic activity. Indonesia's Purchasing Managers' Index (PMI) is still at a contraction level of 49.2 in September 2024, but has increased compared to August 2024 which was 48.9.

This success places Indonesia better than several other ASEAN countries that have experienced a decline in manufacturing activity, such as Malaysia (from 49.7 to 49.5) and Thailand (from 52.0 to 50.4).

Airlangga said the government will continue to optimize the implementation of policies to improve the manufacturing industry such as downstreaming natural resources (SDA), use of domestic products, import substitution, including increasing exports, ease of doing business and investment, and development of human resources and technology through the Making Indonesia 4.0 program.

"The government continues to ensure sufficient food supplies, maintain price stability, and encourage the recovery of vital sectors such as the manufacturing industry, construction and agriculture. With various efforts and policies that have been carried out by the central government, regional governments and Bank Indonesia, it is hoped that it can support price stability and economic growth can continue to be maintained," he explained.