Sri Mulyani: Inflation In 2020 Could Be 1.5 Percent, The Lowest In 6 Years

Minister of Finance, Sri Mulyani Indrawati. (Photo: Ministry of Finance)

JAKARTA - Finance Minister Sri Mulyani Indrawati projects that the inflation rate at the end of 2020 will reach the level of 1.5 percent. In fact, it is also predicted to be the lowest for a period of six years.

Previously, the Central Statistics Agency (BPS) recorded inflation in November 2020 at 0.28 percent on a monthly basis or month to month (mtm). This figure is higher than inflation in November 2019 which was only 0.14 percent.

Meanwhile, on an annual basis, inflation was recorded at 1.59 percent. Meanwhile in calendar year, inflation reached 1.23 percent on an annual basis or year to date (ytd).

Sri Mulyani said that the low inflation rate was caused by weakening public demand or consumption due to the COVID-19 pandemic. Although low inflation has an effect on the cost of funds or lower production costs. However, on the other hand, caution is needed to re-increase public demand.

"The 2020 outlook is estimated at 1.5 percent. This is very low in the last six years. This is single digit and very low. On the one hand, it can have a lower cost of funds effect, but we need to be careful to see the demand which must, need to be. , strengthened, "he said, in a virtual press conference, Tuesday, December 1.

The state treasurer said that demand, which is still depressed due to COVID-19, must be a concern and must be strengthened in the future.

"In the third quarter there was a turning point for aggregate demand, there was a reversal except for imports which were still deep contraction. The economy had passed its worst point in the second quarter, but that does not mean we should be complacent because it is still an initial reversal and must be maintained," he said.

Sri Mulyani also said that all countries in the world that were affected by the pandemic had weakened public demand. Countries such as the United States and European countries must struggle to restore socio-economic activities in order to grow demand without having to exacerbate the number of positive cases.

Furthermore, Sri Mulyani hopes that in 202 consumption activities, especially the middle class people who are under pressure this year, can grow again.

"So if you look at consumption activities, especially the upper middle class, we hope that in 2021, with vaccinations, health protocols, people can start doing activities," he explained.