Low Public Purchasing Power, BI: Inflation This Year Will Be Below 2 Percent

Governor of Bank Indonesia (BI), Perry Warjiyo. (Photo: Bank Indonesia)

JAKARTA - The COVID-19 pandemic has made many Indonesians think again about shopping. One of the contributing factors is the uncertainty about when the pandemic will end. However, this has resulted in inflation until the end of 2020 being below 2 percent.

The Governor of Bank Indonesia Perry Warjiyo explained that the low inflation until the end of 2020 was due to the very low purchasing power of the people. In fact, the inflation rate will be below the government's target.

"We estimate that CPI (Consumer Price Index) inflation by the end of 2020 will be lower than 2 percent or below the target of 3 percent plus minus 1 percent," he said, at the '2020 National Coordination Meeting for Inflation Control' which was held virtually, Thursday. , October 22nd.

Until September 2020, Perry said, inflation in all regions was very low. Nationally, the inflation rate was recorded at 1.42 percent year-on-year or on an annual basis.

According to Perry, low inflation is in line with weak demand, maintained inflation expectations and the stability of the rupiah exchange rate. In addition, the inflation rate is also influenced by the availability of supply from harvests in production centers and low global food commodity prices.

Regarding inflation in 2021, said Perry, the figure will be better in the range of 3 percent plus minus 1 percent. He said that his party and the relevant authorities would be vigilant about increasing domestic demand in line with the recovery of the national economy.

In addition, said Perry, the sustainability of regional food supply and distribution, as well as the monetary expansion carried out from 2020, will continue to strengthen the strong joint synergy between the central government, regional governments and Bank Indonesia (BI).

"We have strengthened various innovations to maintain inflation in order to be vulnerable to targets that are always being achieved, which have been going on since 2015," he said.