UI Researcher Foresaw Russia-Ukraine War Potentially To Hoist Indonesia's Inflation To Level 2.25 Percent

Illustration (Photo: Doc. Antara)

JAKARTA – The Institute for Economic and Community Research, University of Indonesia (LPEM UI) emphasized that global economic and political conditions such as the Russian and Ukrainian attacks were one of the determining factors for the dynamics of inflation for several quarters in Indonesia.

It was stated that the current tensions in Eastern Europe had caused the world crude oil price to rise past 100 US dollars per barrel.

"This will have a major impact on the increase in oil prices in Indonesia in the coming months because oil prices have a 5 percent weight in inflation," said one researcher at LPEM UI Chaikal Nuryakin in his report quoted on Sunday, March 6.

In his explanation, Chaikal said that if Indonesia's wheat needs were also supplied by Ukraine, it would also put pressure on inflation in the March 2022 period.

"Looking at the development of daily cases, global economic conditions, and COVID-19 which tends to increase, we predict general inflation in March year on year (yoy) will increase in the range of 1.9 percent to 2.25 percent," he said.

Likewise, the increase in the inflation rate on a monthly basis, which is estimated to increase to the range of 0.2 percent to 0.3 percent, is due to stable core inflation and the mean reversion of volatile price components.

"In the future, inflation will depend very much on efforts to stabilize oil prices and global economic indicators, prevent and control the spread of the third wave of COVID-19 in Indonesia," said Chaikal.

For information, earlier this month the Central Statistics Agency (BPS) released a statement that there was a deflation of 0.02 percent throughout February 2022.

These notes make the inflation book on a calendar year basis (January-February 2022) to 0.72 percent and annually (February 2022 to February 2021) is 2.03 percent.