Indonesia Records Inflation of 0.69% in June 2017

Photo by BPS

JAKARTA (TheInsiderStories)- Indonesia recorded Consumer Price Index (CPI) of 0.69 percent in June 2017, driven by the increase of commodity price during Ramadhan to Eid al-Fitr, Central Bureau of Statistics (BPS) reported. Last month the CPI recorded 0.39 percent.

“Inflation occurs due to the spike in commodity prices during Ramadhan to Eid,” Chairman of BPS Kecuk Suhariyanto in press conference on Monday (3/7).

Data from (BPS) show that all of expense component contributes for the inflation in June 2017. Inflation of transportation, communication, and financial services became main contributor of inflation in June.

While inflation of staple foods reached 0.69 percent, processed food, beverages, and cigarette contributed 0.39 percent. Housing, water, electricity, gas and fuel also contributed 0.75 percent. Inflation of clothing reached 0.78 percent and health’s inflation was 0.34 percent.

The inflation year to date (y-t-d) was recorded at 2.38 percent in while inflation year on year (y-o-y) in the month reached 4.37 percent.

Off 82 cities, 79 cities posted inflation while 3 cities reported deflation. The highest inflation in June occurred in Tual (4.48 percent) while lowest inflation was at Merauke (0.12 percent).

The core component in June experienced inflation of 0.26 percent. The core inflation rate in calendar year inflation of 1.59 percent and the y-o-y core inflation rate of 3.13 percent

The inflation year to date (y-t-d) was recorded at 1.67 percent while inflation y-o-y in the month reached 4.33 percent or lower than the same period last year,  which reached 7.15 percent, BPS data show.

Darmin Nasution, Coordinating Minister for Economic Affairs comenting, a slight rise in inflation in June, remain within the government’s target for this year’s inflation (3-5 percent range). In 2016, the inflation was 3.02 percent.

But the main reason why Indonesia’s inflation has risen this year is the government’s efforts to reduce electricity subsidies (it has raised electricity for specific households).

Considering Indonesian inflation remains stubbornly high, while Indonesia’s economic growth could accelerate to 5.2-5.3 percent (y-o-y) in 2017 and the US Federal Reserve is expected to implement more interest rate hikes this year, the central bank (Bank Indonesia/BI) is likely to decide for a 25 basis-points rate hike before the end of the year. This would support the rupiah in times of rising US dollar strength. (RF)