Bank Indonesia: Year-End Inflation Can Be Above 6 Percent

Illustration (Photo: Doc. Antara)

JAKARTA Bank Indonesia (BI) confirms that the inflation rate in 2022 will continue to increase until the end of the year.

This was conveyed directly by BI Governor Perry Warjiyo on the sidelines of a meeting between the Minister of Finance and the Governor of the Central Bank for G20 members (4th FMCBG) in Washington DC, United States.

"Inflation (consumer price index / IHK) at the end of the year will be slightly higher than 6 percent," he said on Wednesday local time.

According to Perry, this situation was driven by several things, especially related to price policies regulated by the government or regulated prices.

"Inflation in Indonesia is much lower than other countries, including yesterday there was an adjustment in the price of pertalite and diesel (subsidized)," he said.

Perry then made a comparison of the inflation rate that was inscribed by the Republic of Indonesia with global conditions in general.

"Compared with world inflation which reaches 9 percent, we are classified as low," he added.

The BI boss ensured that if the pace of rising national inflation would slope again along with the stronger the mix of monetary and fiscal policies.

"We together with the government believe this inflation will decline, and will return below 4 percent starting in the third quarter of 2023," he said.

For information, the government's inflation target with Bank Indonesia at the beginning of the year was actually only 3 percent plus minus 1 percent. However, the target was then broken due to the high price of energy and food commodities due to continued global uncertainty.

Meanwhile, the peak of IHK inflation in 2022 occurred last September by posting 5.95 percent. BI responded to this condition by raising the benchmark interest rate by 75 basis points (bps) to 4.25 percent in order to reduce higher increases.