Bank Indonesia: 2023 June's Inflation Reduction Is Back On Target

Illustration (Photo: Doc. Antara)

JAKARTA Bank Indonesia (BI) stated that the decline in general inflation (consumer price index / IHK) to 3.52 percent year on year (yoy) in June 2023 has been included in the target this year, which is 3 percent plus minus 1 percent.

Head of the BI Communications Department Erwin Haryono said the inflation forecast was more than originally estimated, namely in the second semester of 2023.

"The return of inflation to the target range is inseparable from the consistency of monetary policy and the close synergy of inflation control between Bank Indonesia and the Government (Center and Region) in the Central and Regional Inflation Control Team (TPIP and TPID) through strengthening the National Movement for Food Inflation Control (GNPIP) in various regions," he said in a written statement, Tuesday, July 4.

According to Erwin, last month's IHK inflation was mainly influenced by core inflation which was 0.12 percent month-to-month (mtm), higher than the previous month's 0.06 percent (mtm).

He explained that the development of core inflation is in line with the increasing mobility of the community in line with the addition of the Eid Al-Adha National Religious Holiday (HBKN).

The main commodities that contributed to the increase in core inflation were contract and rental commodities. On an annual basis, core inflation in June 2023 was recorded at 2.58 percent (yoy), lower than inflation in the previous month of 2.66 percent," he said.

Erwin added that volatile food group inflation in June 2023 decreased compared to the previous month's development. The volatile food group recorded inflation of 0.44 percent (mtm), lower than the previous month which was 0.49 percent.

It was stated that this incision was contributed mainly by deflation in shallot commodities and cooking oil was supported by maintained supplies.

Meanwhile, the decline in inflation is further restrained by inflation in broiler meat commodities, broiler eggs, and garlic. The volatile food group on an annual basis experienced 1.20 percent inflation (yoy), lower than the previous month's inflation of 3.28 percent.

Then, the administrative prices group recorded deflation of 0.02 percent (mtm), lower than the deflation in the previous month of 0.25 percent.

"Administered prices group deflation is influenced mainly by the price adjustment of non-subsidized fuel oil on June 1, 2023," he said.

Erwin also said that further deflation was restrained by inflation of air transport rates and filter kretek cigarettes due to increased mobility during the Iduladha HBKN holiday and the continued transmission of tobacco excise rates.

On an annual basis, the administrative price group experienced 9.21 percent inflation (yoy), lower than the previous month's inflation of 9.52 percent.

"In the future, Bank Indonesia believes inflation will remain under control within the target of 3 percent plus minus 1 percent in the remainder of 2023," he concluded.