Inflation Suppressed by Energy Subsidy, Bank Indonesia Governor Says

18 August 2022 15:30 WIB

TEMPO.CO, Jakarta - Bank Indonesia Governor Perry Warjiyo on Thursday said that global inflationary pressures on domestic inflation are able to be restrained as the government allocated energy subsidies.

"The pressure can be contained in line with the government's policy to increase energy subsidies," said Perry at the opening of the national coordination meeting on inflation control at the State Palace which was broadcasted on Thursday, August 18.

Perry sees that the increase in global energy prices has pushed up inflation-administered prices, including air transportation.

He said inflation in July 2022 reached 4.94 percent, still lower than other countries, but exceeding the upper limit of the target of 3 percent +/- 1 percent. This, he explained, was mainly due to high inflation in the volatile food category which reached 11.47 percent where it should fluctuate no more than 5 percent or a maximum of 6 percent.

The Bank Indonesia governor argued that the problem stems mainly from the increase in global commodity prices due to continued geopolitical tensions in a number of countries that disrupt supply chains. That has encouraged those countries to carry out food protectionist policies.

Domestically, supply disruptions have also occurred in a number of horticultural production centers including various chilies and shallots due to structural problems in the agricultural sector, as well as weather, and the availability across time and between regions.

MUHAMMAD HENDARTYO 

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