Inflation Rate Expected to Increase in July 2017

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  • TEMPO.CO, Jakarta - Bank Indonesia predicts inflation rate to increase in July 2017. Price volatility due to Eid al-Fitr holiday and high administered prices can cause inflation.

    The Central Statistics Agency noted that as of March 2017 the inflation rate of the calendar year stands at 1.19 percent and the annual inflation rate stands at 3.61 percent. Food prices dropped by 0.66 percent but electricity and expenditures on electricity and fuel continue to increase by 0.30 percent.

    Tjahya Widayanti, director general of domestic trade for the Trade Ministry, did not deny that inflation rate may increase due to inability to lower food price. She pointed to the difficulty to set lower onion prices despite President Joko Widodo’s instruction to do so last year. “It’s a dilemma, if we cut the supply chain, we have to sacrifice certain business players,” she said.

    Therefore, the government is aiming secure food stock first and foremost. Tjahya said that the National Logistics Agency (Bulog) will directly distribute food to vendors.

    Agriculture Minister Amran Sulaiman said that rice supply is also safe. According to him, stable weather conditions have been conducive to improving rice stock until Eid al-Fitr. “With 2.5 million tons of rice stock, I believe that no one will be able to change the price.”

    The Coordinating Minister for Economic Affairs Darmin Nasution said that his team is studying a formula to cut food prices. According to him, the government will maintain the prices received by farmers. “If we lower [the prices] received by farmers, it will burden them.”

    Energy and Mineral Resources Minister Ignasius Jonan promises that fuel prices will not increase until June. Thereafter, the government will calculate the need to increase prices and financial condition of state-owned oil company PT Pertamina (Persero) and the available fuel reserves.

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