Month on month inflation rate, however, decelerated to 0.28 percent in July from 0.59 percent in June.
The Head of Central Statistics Agency Suhariyanto said the core inflation accelerated to 0.41 percent month-on-month in July from 0.24 percent in June. Furthermore, the volatile food price increases 0.90 percent in July 2018 (month-on-month) and administered prices experienced a deflation of 0.68 percent (month-on-month).
The inflation in July 2018 was triggered by an increase of foods by 0.86 percent and contributed to 0.18 percent, followed by education and recreation by 0.38 percent and contributed 0.07 percent.
“For food, an increase of egg price, chicken, chili, and long bean contributed the most,” he said.
The education contributed significantly to the inflation due to the school academic year that started last month. The education will remain to contribute to the inflation acceleration this month as the college academic year will start this month.
All 82 cities surveyed, Central Statistics Agency reported 68 cities experienced inflation acceleration with the highest was Sorong (1.47 percent) and the lowest were Depok (0.03 percent), Banyuwangi (0.03 percent), and Surabaya (0.03 percent).
Suhariyanto stated inflation in July was lower than the previous month as the momentum of Ramadan and Eid Al-Fitr was over so that prices returned to normal. He added the low inflation in July reflects the success of government and Bank Indonesia in keeping tame inflation.
The low inflation in line with the Bank Indonesia that estimated inflation remains within its target this year at 2.5-4.5 percent. The central bank raised its key interest rate third time this year with a total hike of 1 percent, taking into account the low inflation rate.
However, the low inflation also indicated the weak people’s purchasing power. Southeast Asia’s biggest economy recorded 4.95 percent in household consumption in 2017 or the lowest since 2010 that reflected low people’s purchasing power.
In addition, the weak growth of household consumption continued recorded disappointing figure in the first quarter of this year. It only rose to 4.95 percent, from 4.93 percent, or still below 5 percent. Household consumption accounts for about 56 percent of the nation’s total economic growth.