Fuel Retail of Pertamina

JAKARTA (TheInsiderStories) – President Joko Widodo’s war on inflation, as reflected in some of his populist moves, resulted in some positive outcomes as the key reading on inflation came in tame in April.

On Wednesday (02/05) the country’s Statistics Agency unveiled that annual inflation rate in April was nearly the same as the previous month and is still within the central bank’s target range. On year-on-year calculation, the headline consumer price index in April rose 3.41 percent from the same period last year, nearly the same pace as in March (3.40 percent).

On monthly basis, the CPI rose 0.10 percent from the previous month.

Lower rice prices after great harvest season has helped inflation manageable, Yunita Rusanti, deputy head of the statistics agency said on Wednesday.

April’s inflation was still within the central bank target of 2.5-4.5 percent this year. However, The Insider Stories noted that despite April figure was tame, inflationary pressures still appears on raw food and processed food products, despite some efforts from President Widodo to head off risks of higher food costs.

The move includes the government’s policy to import rice to boost stocks and also opened the door to beef imports from the United States and Brazil, as cheaper alternatives. Indonesia currently relies on beef imports from Australia to fill up the gap of meat need at home.

However, we noted that pressures could build up ahead of Muslim’s holy month of Ramadan, as food consumption usually increases with Muslims usually consumes more foods in the evening feasts.

On the positive note, the cost of transportation apparently has eased on the back of the government’s intervention in controlling the price of non-subsidized fuels by distributors (see the table).

Last month, the govenment instructed fuel retailers including state energy company PT Pertamina and the local arm of Royal Dutch Shell Plc and Total SA to secure government approval before raising prices of non-subsidized fuel.

Higher non-subsidized fuel price was blame on higher inflation in March.

Widodo also has ordered a freeze on power and fuel prices and the government has flagged that a subsidy on diesel may be doubled.

In overall, inflation remains under control and manageable. April’s figure came lower than 3.50 percent median forecast from the market forecasts, as provided by Reuters.

With April inflation was still within the central bank range, it would help ease pressures against Bank Indonesia to hike the benchmark rate, amid rupiah depreciation.

Email: elisa.valenta@theinsiderstories.com

 

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