Bank Indonesia, the country’s central bank, said that the consumer price index rose by 3.2% at the end of the third week of February, compared to the same period last year, indicating only mild inflation going forward. Agus Martowardojo, Bank Indonesia’s governor, said the central bank projects inflation to be lower than January’s 3.25% pace. The bank targets Indonesia’s inflation this year to be between 2.5% and 4.5%. A mild inflation rate would support the central bank’s accommodating monetary stance, having kept its benchmark interest rate at a record low of 4.25% for six consecutive months. The biggest contributor to that figure is still volatile foods, which, according to Agus, will probably account for the highest volatile foods inflation rate in the last three years. Prices of rice, red chili peppers and garlic have been rising in recent months, reflecting supply-side problems of the commodities in some regions. Volatile foods inflation in February 2015 was recorded at 4.84%, while in February 2016 that figure rose to 7.87%, while in February last year the rate stood at 4.46%. Agus hopes lower volatile food inflation trends in some regions in eastern Indonesia, including Sulawesi and Papua, can help contain overall volatile foods inflation. The central bank targets this year’s volatile food inflation to be below the 4% to 5%range.
Inflation stands at 3.2% in third week of February: Bank Indonesia
March 5, 2018 News