Government Reveals 3 Steps to Preventing Inflation Storm

TEMPO.CO, Jakarta - The Coordinating Ministry for Economic Affairs’ deputy of macro economy and finance Iskandar Simorangkir on Thursday said the government has executed a number of steps that will help the country face a possible inflation storm following price increase of commodities such as garlic and red chili pepper. 

Iskandar in an interview yesterday said that the first strategy is to increase supplies by planting chili peppers in every neighborhood to expand the food area and improve productivity. 

Secondly, the government is maintaining the smoothness of the food distribution and ensuring that inter-regional cooperation will help the flow of distribution. The government also claims to have helped subsidize transportation costs to suppress the price of commodities. 

Third, according to Iskandar, is through guaranteeing the affordability of prices by subsidizing 40 percent of the lowest economy group. He gave examples of holding back the increased electricity tariff for users of electricity under 3,500 VA, unchanging the prices of 3 kg cooking gas, pushing the use of electric stoves, and conducting market operations to add the supply of commodities in the market. 

The volatile component of inflation has reached 10.3 percent. This increase came from the high prices of red chilies and cayenne pepper as well as shallots due to the rainy season at the production center. Iskandar said his ministry had sent a letter to local governments to help control prices.

Bank Mandiri economist, Faisal Rahman, said that on order to overcome inflation, the state needs to know the source of the cause. For 2022 inflation, he sees that the driver is the post-pandemic economic recovery process and cost-push inflation due to the disruption of global supply chains.

"Then, the Russo-Ukrainian war," he added.

Faisal said that Bank Indonesia's monetary policy would be effective in helping to stabilize demand-pull inflation. However, on the other hand, steps need to be taken to address the supply side.

"Policies that can be more effective are to ensure the safe supply and uninterrupted distribution," he said. Thus, cooperation from the distribution and trade sectors is needed.

NATHANIA S. ALEXANDRA

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