Inflation in 2023 Remains Within Target Range, Assures Minister of Economic Affairs

Indonesian Traditional Market

Minister of Economic Affairs, Airlangga Hartarto, has provided assurance that inflation in the year 2023 will remain within the target range set by the government.

The latest data from the Central Statistics Agency (BPS) reveals that June 2023 inflation, coinciding with the Eid al-Adha holiday, stood at 3.52% on a year-on-year basis, aligning with the target range for 2023 of 3% plus or minus 1%. Additionally, on a monthly basis, there was a recorded inflation of 0.14%, surpassing the inflation rate of 0.09% observed in May 2023.

Minister of Economic Affairs emphasized the controlled inflation rate achieved during the first half of 2023, attributing it to the solid coordination and synergy between the Central Inflation Control Team (TPIP) and Regional Inflation Control Team (TPID).

He further stated, “This synergy will continue to be reinforced in order to ensure that inflation in 2023 remains within the targeted range, serving as a strong foundation for sustainable economic growth,” as conveyed in an official statement released on Monday (3/7/2023).

Looking at historical trends, inflation during the Eid al-Adha period typically stems from increased food prices. Notably, inflation in food prices, particularly volatile food items, experienced a month-to-month increase of 0.44%. This increase was primarily driven by the rising prices of chicken, eggs, and garlic.

However, by mid-year, the year-to-date inflation in volatile food reached 3.22%, indicating a 1.20% annual inflation rate. Although this is slightly lower than the 3.28% year-on-year inflation recorded in May 2023, it signifies a substantial contribution to overall inflation.

The rise in food prices can be attributed to the persistently high costs of corn, which serves as animal feed. This situation stems from the delayed recovery in production following the early culling measures implemented by farmers in 2022.

In addition, the increase in garlic prices is influenced by the ongoing high prices in China, a significant source of imports, although there has been a gradual decline in recent times.

On the other hand, the administered prices, which are regulated by the government, experienced a deflation of 0.02% on a monthly basis. This deflation can be primarily attributed to the decrease in prices of specific gasoline types, reflecting the global decline in oil prices observed in June.

However, this deflation was somewhat offset by the increase in air transportation fares due to heightened demand during the extended Eid al-Adha holiday in 2023.

Overall, Airlangga Hartarto’s reassurance regarding the inflation outlook for 2023 and the effective coordination between inflation control teams underscores the government’s commitment to maintaining price stability and fostering sustainable economic growth.