Controlled Inflation, Airlangga Reveals National Economy Performance Remains Tough

Coordinating Minister for the Economy Airlangga Hartarto (photo: between)

Coordinating Minister for Economic Affairs Airlangga Hartarto said Indonesia's inflation rate in December 2024 remained under control within the national target range of 2.5 percent plus minus 1 percent. Inflation in December 2024 was recorded at 1.57 percent (yoy), lower than inflation in December 2023 at 2.61 percent.

According to Airlangga, related to inflation achievements throughout 2024, it is inseparable from various factors both external and domestic, as well as the success of inflation control policies coordinated by the National Inflation Control Team.

Airlangga conveyed the sentiments of external fluctuations in global commodity prices, such as gold, coffee, CPO and crude oil, encouraging the increase in domestic commodity prices.

Meanwhile, from within the country, Airlangga conveyed the adjustment of the Tobacco Product Excise (CHT) tariff, high rainfall and the moment of the National Religious Holiday (HBKN) as the main driver of the inflation movement.

Meanwhile, the inflation of volatile food (VF) components in December 2024 was recorded at 2.04 percent (mtm) and 0.12 percent (yoy).

"This shows that the efforts of the Government and Bank Indonesia through TPIP and TPID in controlling food prices remain below 5 percent as the results of the 2024 HLM TPIP agreement," he said in his statement, Friday, January 3.

Meanwhile, Airlangga explained that price component inflation is regulated by the Government or administrative price (AP) is still stable, namely 0.03 percent (mtm) and 0.56 percent (yoy). Overall, this inflation is still maintained in the target range of 2.5 percent plus minus 1 percent supported by an increase in the core component of 0.17 percent (mtm) and 2.26 percent (yoy).

Airlangga said that the annual volatile food has decreased, although some commodities have continued to increase, such as rice, onions, garlic and broiler meat.

"There was an uproar in the peak harvest from March 2023 to April 2024 and an estimated harvest area of 1.54 percent in 2024 has caused an increase in rice prices in early 2024," he said.

Meanwhile, the price of garlic has increased, driven by soaring garlic prices in China, which is the main import country. On the other hand, commodities that contribute to annual deflation are red chilies and cayenne peppers.

Core components reflecting people's purchasing power experienced inflation of 0.17 percent (mtm) or 2.26 percent (yoy).

Airlangga said the increase was mainly influenced by the increase in the price of gold jewelery. The average price of gold in 2024 rose by 22.88 percent compared to the average year of 2023 or 0.35 percent (yoy).

"The global gold price can still fluctuate in the midst of the ongoing geopolitical conflict. In addition, the price of coffee has also increased, namely 67.45 percent which has resulted in domestic coffee also increasing by 0.10 percent (yoy)," he added.

Meanwhile, the price component regulated by the Government experienced inflation of 0.03 percent (mtm) or 0.56 percent (yoy). Controlled inflating price components regulated by the Government is influenced by air transportation rates that experience deflation with a contribution of 0.01 percent (mtm) because the Government lowered aircraft ticket prices for 16 days during the HBKN Christmas and New Year period, namely on December 19, 2024 to January 3, 2025.

Airlangga said that the Government regulates that price component inflation is relatively maintained in line with the Government's efforts to provide affordable aircraft tickets so that community mobility can increase during the Nataru holiday period.

"The synergy between the Government and Bank Indonesia through TPIP and TPID has succeeded in maintaining price stability and providing a strong foundation for sustainable economic growth," he explained.

Airlangga said the Government would also continue to ensure sufficient food supply, maintain price stability, and encourage the recovery of vital sectors such as the manufacturing, construction and agriculture industries.