Within a month, Indonesia has issued state bonds more than US$10 billion to finance its 2020 State Budget deficit - Photo by MoF Office

JAKARTA (TheInsiderStories) – Finance Minister Sri Mulyani Indrawati sees Indonesian inflation rate to be below 3.5 percent level by the end of 2019. On November, the statistic bureau reported the annual inflation rate decreased to 3.0 percent in November from 3.13 percent in the previous month, as the price of most of the expenditure group index increased.

“It is possible that inflation is still within the 3.5 percent plus minus one percent target. Below 3.5 percent is clear if you look at its position up to now,” she said on Tuesday (3/12).

While, UOB Group’ economist Enrico Tanuwidjaja reviewed the country’ annual inflation rate slowed for a third straight month in November to 3.0 percent, as prices for transport, clothing, and housing-electricity increased at a slower pace, which more than offset the higher food and process food prices”.

“We expect higher inflation to continue amidst year-end festivities going into the first quarter of 2020. Nevertheless, the 2019 year-to-date inflation is currently averaging at 3.1 percent and we continue to see the full year inflation average to register lower than the mid point of 2.5 – 4.5 percent central bank’ official target range,” he noted.

For 2020, Tanuwidjaja forecasting the inflation average a higher 3.6 percent, on the back of fuel subsidy removal and potential recovery in demand. Those factors, he believed, may drive inflation higher while still keeping it within the range of central bank’ 2020 official target range 2.0 to 4.0 percent.

While, economist at Pefindo, Fikri Permana, viewed that low inflation data, 2.37 percent year to date, will be one of the negative sentiments for market players, due to fears of declining purchasing power. As known, the Jakarta Composite Index lowered in this recent weeks amid the lack of good economic data in Indonesia and global conditions.

Recently, the government and Bank Indonesia (BI) agreed on three strategic steps to keep inflation within the target range. Firs steps its to maintain price affordability, supply availability, smooth distribution, and effective communication.

In the National Inflation Control Roadmap 2019-2021, the policy is pursued by giving priority to availability of supply and smooth distribution, which is supported by a more conducive ecosystem and the availability of accurate data.

Second, strengthening the implementation of the National Inflation Control Roadmap 2019-2021 and also implementing the Roadmap for Inflation Control at the Provincial level. And third, strengthening the coordination of the central and regional governments in controlling inflation through the holding of the National Inflation Control Coordination Meeting.

According to the BI data, the inflation rate in the last four years has been positive supported by the synergy of monetary and fiscal policies in managing healthy macroeconomic conditions and structural policies, including infrastructure development in various regions that improve connectivity and smooth distribution.

Going forward, the government at the central and regional levels also the central bank will continue to strengthen policy coordination to bring inflation in a downward trend in the range of 3±1 percent in 2020 and 2021, so it can support strong, sustainable, balanced and inclusive economic growth.

Governor Perry Warjiyo stressed that food supply and distribution is more than enough. Moreover, the central bank claimed a manageable Rupiah depreciation. He revealed, that BI will coordinate with the central and regional government to maintain low inflation.

Written by Staff Editor, Email: theinsiderstories@gmail.com