Corn Harvest in Lampung (Image credit: Ministry of Village, Disadvantaged Regions Development and Transmigration)

JAKARTA (TheInsiderStories) – The stability of food prices in recent years has aided the government’s drive to reduce poverty rate, according to the Statistics Indonesia.

A recent report shows that the poverty and income inequality rates in Indonesia in September 2017 fell from 2016, largely owing to efforts to control the inflation and the government’s rice subsidy programme.

At the end of September 2017, an estimated 26.6 million Indonesians, or 10 percent of the country’s population, lived below the poverty line, down from nearly 27.8 million in September 2016. The number was also lower than that of March 2017.

The country’s poverty rate began to decline since 1999, when approximately 25 percent of the population was poor.

Foods account for about 20 percent of the poor’s monthly expenses in Indonesia. A person is classified as poor when he/she spends less than US$25 per month.

Rice production and distribution was one of the topics discussed during a meeting on February 27 between Indonesian President Joko Widodo and 11 economists in agriculture and fisheries.

The economists agreed with the President’s view that stable food prices will have positive impacts on farmers’ earnings.

The government believes that in order to control the purchasing power of the society, they need to maintain the stability of inflation, including food volatility. Thus, the Indonesian government decided to import 500,000 ton of rice and staple food to stabilize the rising rice price.

Rice is the main staple food of most Indonesians. Its price surge could significantly stimulate inflation and affect purchasing power.

Indonesia Statistics announced that Indonesia’s headline inflation reached 0.17 per cent month-on-month (m/m) in February 2018. This is a lower inflation rate compared to February 2017 (+0.23 per cent m/m), hence the country’s annual headline inflation eased to 3.18 per cent (y/y) in February 2018, from 3.25 per cent (y/y) in the preceding month.

Most pressures stemmed from processed food products and a rise in prices of rice and garlic. Suhariyanto, Head of the agency, added that bad weather contributed to inflation as it limited the supply and distribution of food products.

Written by Elisa Valenta, email: elisa.valenta@theinsiderstories.com

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