Whoops! Bank Indonesia Estimates Inflation To Only 4.8 Percent, But Now It Has Collapsed To 4.9 Percent

JAKARTA - Bank Indonesia (BI) is one of the macro-financial institutions that are very concerned about the movement of inflation. This is based on BI's main task of maintaining monetary stability in the country.

Most recently, the central bank was said to have estimated the inflation rate for the July 2022 period on an annual basis (year on year/YoY) of 4.8 percent. However, the realization that occurred according to data from the Central Statistics Agency (PBS) reached 4.94 percent.

This was revealed directly by the Governor of Bank Indonesia Perry Warjiyo in a press conference earlier this week.

"Current inflation as reported by BPS, which is 4.94 percent, is close to BI's forecast in July of 4.89 percent", he said after a periodic meeting of the Financial System Stability Committee (KSSK) quoted on Tuesday, August 2.

According to Perry, the high inflation realization last month was caused by the dominance of the food price component, which was 11.74 percent YoY.

"This is due to supply disruptions from abroad and at home, there is a weather factor", he said.

However, Perry believes conditions will improve in the next few months in line with the increasing supply.

“Our monitoring from 46 representative offices throughout Indonesia shows that for the period August, September, October until the end of the year supply will increase. This condition will cause inflation to decrease", he explained.

For information, Bank Indonesia is one of the institutions that are quite aggressive in observing the development of inflation. For example, at the end of May, BI had stated that the inflation level would exceed the target set, namely 3 percent plus minus 1 percent.

Sure enough, on July 1, 2022, BPS reported that the annual inflation rate had penetrated 4.35 percent. Then in the latest release from the Central Statistics Agency earlier this week, it was stated that inflation had reached 4.94 percent.

The monetary authority itself has yet to take a policy to raise the benchmark interest rate from the level of 3.50 percent considering that core inflation is still under control.