Inflation Has Entered Target, Ministry Of Finance Now Focuses On El Nino Mitigation

Illustration (Photo: Doc. Ministry of Finance)

Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance (Kemenkeu) Febrio Kacaribu said, inflation in July 2023 continued the downward trend to 3.08 percent year on year (yoy) or a significant decrease from June 2023 which amounted to 3.52 percent.

According to him, this slowing down is influenced by the slowdown in price increases in all components. He said, core inflation is still continuing its downward trend to 2.43 percent yoy (June 2,58 percent) due to the slowdown in price increases in almost all groups of goods and services.

Furthermore, price inflation regulated by the Government (administered price) continues to decline to 8.42 percent yoy, down from June (9.21 percent yoy).

"This reflects good domestic energy price management amid volatile world crude oil prices," he said in a written message on Tuesday, August 1.

Febrio explained, in terms of food, volatile price inflation (volatile food) experienced deflation of 0.03 percent yoy, down from inflation in June 2023 (1.20 percent.

"This deflation is influenced by the controlled price of various chilies and shallots due to the abundant stock," he said.

In addition, he continued, the control of food prices was supported by the collaboration of the national food inflation control policy which was increasingly effective.

"Nevertheless, the potential impact of El Nino needs to be watched out for in line with the decreasing rainfall that can affect agricultural productivity," he said.

Therefore, the government is said to be committed to controlling inflation nationally. Various policies through the Central Inflation Control Team (TPIP) and the Regional Inflation Control Team (TPID) are carried out consistently in order to maintain food price stability.

"In addition to food price interventions such as market operations and low-cost food titles, efforts to maintain adequacy in rice supply and facilitation of food distribution continue to be carried out to anticipate price fluctuations. Meanwhile, in dealing with the impact of El Nino, policies carried out include optimizing the use of water infrastructure and strengthening food barns," he said.

Sri Mulyani's subordinate also said that the government also provided fiscal incentives of IDR 1 trillion in 2023 to support inflation control at the regional level.

Meanwhile, as of July 31, 2023, the government has distributed IDR 330 billion for the first period. The allocation of fiscal incentives is proof of the government's consistency in controlling national inflation, especially optimizing the role of the State Budget as a shock absorber.

"With these funds and support for policy innovation in each region, price stability is expected to be maintained and the inflation target of 3 percent plus minus 1 percent at the end of the year can be achieved," closed Febrio.