June Inflation Rises Drastically to 0.61%

Indonesia's Traditional Market

Indonesia’s Central Statistics Agency (BPS) issued an inflation report in June. Head of BPS reported that June inflation was recorded at 0.61% compared to the previous month (month-to-month/mtm) with the Consumer Price Index (CPI) from 110.42 in May 2022 to 111.09 in June 2022. Calendar year inflation was 3.19%

Annually, inflation is already above 4%. Margo in an official release of virtual statistics in Jakarta, Friday (1/7/2022) explained, “By looking at global developments and weather conditions, inflation in June 2022 mtm 0.61 percent. The year-on-year inflation rate, namely June 2022 against June 2021 is at 4.35 percent.”

“Restriction policies on food exports are still ongoing. There are eight countries for wheat, eight countries for sugar, three countries for beef, two countries for soybeans and their derivatives, while there are five countries for fertilizer. Like it or not, gradually this has an impact on our country. , said Margo.

Meanwhile, domestically, continued Margo, there was heavy rain in several production centers, especially horticultural products.

Meanwhile, the Price Monitoring Survey (SPH) conducted by Bank Indonesia (BI) predicts inflation in June at 0.5% mtm.

The main contributors to inflation from June 2022 to week IV are red chilies at 0.17% (mtm), cayenne peppers at 0.11% (mtm), shallots at 0.08% (mtm), chicken eggs at 0.05% (mtm), tomatoes by 0.04% (mtm), bottled water, rice with side dishes, and air transportation by 0.02% (mtm), kale, spinach, powder/liquid detergent soap, and kretek cigarettes each filter is 0.01% (mtm).

As previously reported, 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%.

The inflation projection from the market consensus is far below the projection of Bank Indonesia (BI).

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 recorded in East Kalimantan Province was Rp. 138,000 per kg.