Government Asked To Maintain Food Price Stability And Delay VAT Increase

Illustration. (Photo: Doc. Antara)

JAKARTA - Executive Director of the Institute for Development of Economics and Finance (Indef) Esther Sri Astuti asked the government to maintain food price stability and postpone the policy of increasing value added tax (VAT) after seeing inflation performance.

Based on a report from the Central Statistics Agency (BPS), inflation was recorded at 1.55 percent year-on-year (yoy) in November 2024, sloping from October's achievement of 1.71 percent yoy.

Esther assessed that the performance of inflation has the potential to reduce real income due to weakening consumption capabilities. The risk is that economic growth has the potential to slow down.

According to him, the steps that the government can take to maintain price stabilization include three things.

First, maintaining food availability. Second, ensuring smooth food distribution. Third, postpone the planned VAT tariff adjustment to increase to 12 percent on January 1, 2025.

In line with Esther, Director of the Center of Economics and Law Studies (Celios) Bhima Yudhistira assessed that there is a need for policy evaluation to maintain inflation levels, including the issue of VAT 12 percent.

In addition, stimulus injections are also needed that can restore people's purchasing power.

He argues that annual inflation of 1.55 percent is relatively small. If this low inflationary condition continues, it is feared that the economy will experience slower growth. In fact, the 5 percent economic growth target in the fourth quarter of 2024 is quite challenging to achieve.

"Now the biggest challenge is not to let low inflation turn up not because of the increase in people's purchasing power, but because of fiscal policies that encourage the prices of goods and services that will increase significantly next year. This must be maintained by the government," he said, quoted from Antara, Monday, December 2.

Although annual inflation is slowing down, monthly inflation recorded an increase of 0.30 percent (month-to-month/mtm) from the previous 0.08 percent mtm in October.

Meanwhile, inflation for the calendar year was recorded at 1.12 percent (year-to-date/ytd).