Indonesia’s Inflation Continues to Rise Slowly

Indonesia's economic growth
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The crisis is still looming over Indonesia. This is caused by inflation. Indonesia’s inflation is estimated to reach 0.44% (month to month/mtm) in June this year, an increase compared to 0.4% in May. Inflation on an annual basis (year on year / yoy) is also expected to soar.

Throughout the period June 2017-May 2022, Indonesia has also never recorded annual inflation above 4%. In May 2022, annual inflation was only 3.55%.

Quoted, the market consensus from 14 institutions estimates that annual inflation is estimated to reach 4.15%. This level will be the highest since June 2017 or in the last five years when inflation was recorded at 4.37%.

June inflation data will be announced by the Central Statistics Agency (BPS) on Friday (1/7/2022).

The inflation projection from the market consensus is far below the projection of Bank Indonesia (BI). Based on the Price Monitoring Survey until the fourth week of June 2022, this month’s inflation is estimated to reach 0.5% (mtm).

According to BI, commodities contributing to Indonesia’s inflation are still dominated by foodstuffs and spices, such as red chili, cayenne pepper, shallots, chicken eggs, tomatoes, kale, and spinach.

Other contributing commodities are powdered/liquid detergent soap and filter kretek cigarettes. Meanwhile, commodities that contributed to deflation were cooking oil, broiled chicken, beef, garlic, wet prawns, and gold jewelry.

Chili prices have been in the spotlight for the past two months because of the sharp spike in prices. The weather problem has reduced the supply of chili so that the price has soared.

Based on data from the National Strategic Food Price Information Center (PIHPSN), the price of cayenne pepper jumped 53% from IDR 62,450/kg as of May 31 to IDR 95,400/kg on Wednesday (29/6/2022).

In most parts of eastern Indonesia, the price of cayenne pepper even exceeds Rp. 130,000 per kg. The price of the most expensive cayenne pepper was recorded in East Kalimantan Province, was Rp. 138,000 per kg.

The price of red chili is also no less spicy. Red chili prices jumped 34% from IDR 54,350 on May 31 to IDR 74,800 per kg on Wednesday (29/6/2022).

Until the end of June, the price of chili in most parts of Sumatra was still above IDR 100,000 per kg. The most expensive price is in Riau Province, which is Rp. 110,500 per kg.

The price of chicken eggs increased to IDR 29,150 per kg at the end of June from IDR 28,650 per kg at the end of May. The price of shallots rose 39% from IDR 42,900 per kg at the end of May to IDR 59,600 per kg at the end of June.

On the other hand, the price of bulk cooking oil also began to decline in line with the increasing domestic supply of cooking oil. Bulk cooking oil price at the end of June was recorded at Rp 17,450 per kg, cheaper than at the end of May which was recorded at Rp 18,300 per kg.