Inflation Shows Slight Decrease in April 2023, but Transportation Costs Remain High

Indonesia's Traditional Market

The Central Statistics Agency (BPS) has reported that the annual inflation rate continued its downward trend in April 2023. The year-on-year inflation rate for April 2023 was recorded at 4.33 percent, significantly higher than that of April 2022, which was 3.47 percent.

This trend was also observed in January and February 2023. However, when compared to the previous month, the year-on-year inflation rate for April 2023 was lower.

According to Margo Yuwono, the head of the Central Statistics Agency, the development of inflation in April 2023 was influenced by the Ramadan and Eid al-Fitr momentum, as well as the harvest of rice and horticultural commodities during the reporting period.

Margo further explained that the largest contribution to inflation came from the transportation group, which amounted to 11.96 percent, contributing 1.45 percent to the year-on-year inflation rate in April.

The largest contributing commodity to the year-on-year inflation rate in April 2023 was gasoline, with a contribution of 0.91 percent, followed by rice with a contribution of 0.37 percent, and filtered clove cigarettes with a contribution of 0.21 percent.

Out of 90 cities included in the BPS report, 39 cities experienced a lower year-on-year inflation rate than the national average, while 51 cities had a higher rate than the national average.

Economist Joshua Pardede from Bank Permata had predicted that the inflation rate would reach 0.37 percent on a month-to-month basis, while the year-on-year inflation rate in April 2023 was expected to reach 4.37 percent.

Joshua explained that the increase in monthly inflation in April 2023 was mainly driven by an increase in core inflation and government-regulated price inflation.

In relation to National Religious Holidays and the annual mass exodus of migrant workers or “mudik,” the consumption of the population tends to increase, leading to an increase in core inflation, Joshua added.

He also predicted that the core inflation rate in April 2023 would reach 2.91 percent year-on-year. Additionally, the mudik season during Eid al-Fitr would also increase the price of air and land transportation, which would drive up government-regulated price inflation.