Intellasia East Asia News – Increase in inflation still within reasonable limits: economist

The increase in the inflation rate in June 2022 was still within reasonable limits, as it was inevitable, along with the rising commodity prices and recovering public demand, according to economist Piter Abdullah.

“Firstly, the increase in commodity prices, especially food in the global market, and secondly, the recovery of public consumption as the pandemic subsides,” Abdullah noted in a brief message in Jakarta on Monday.

According to Abdullah, the rise in inflation that occurs in the range of four to five percent should not trigger undue concerns, as this increase occurs in line with improving economic conditions in the community.

The Research director of the centre of Reform on Economics (CORE) also pointed out that one area of concern was if the inflation rate rises too high and moves wildly.

“For instance, up to above eight percent. (This is) because it will cut the purchasing power of the poor and restrain economic recovery,” he stated.

Abdullah also explained that the government must make efforts to not increase the price of fuel oil (BBM), gas, and subsidised electricity rates in order to keep inflation stable.

“If the government does not increase the price of subsidised goods, such as Pertalite, gas and electricity, I estimate the inflation rate will be in the range of five to six percent,” he stated.

Earlier, Statistics Indonesia (BPS) recorded that inflation in June 2022 increased by 0.61 percent month-on-month (mom), as was reflected in the increase in the Consumer Price Index (CPI), from 110.42 to 111.09.

BPS Head Margo Yuwono noted in a press conference here on Thursday that red chili, labuyo chili (Capsicum frutescens), shallots, and broiler chicken eggs were the main commodities causing inflation in June 2022.

Meanwhile, the year-on-year (yoy) inflation reached 4.35 percent.

Furthermore, Yuwono stated that out of the 90 cities whose CPI was observed in June 2022, some 85 cities experienced inflation, while the rest recorded a deflation.

The highest inflation, reaching 2.72 percent, was recorded in Gunungsitoli City, North Sumatra Province.

Red chili contributed 1.42 percent to the inflation in the city, while labuyo chili and shallots contributed 0.28 percent and 0.27 percent respectively.

“Meanwhile, in July 2022, the government will increase the electricity tariffs. It may have the potential to raise the inflation rate in July. We will find out the amount during the next month’s (press) release,” the head of BPS remarked.

Volatile prices are the biggest contributor to the inflation, with a contribution of 0.44-percent mom, due to the rising prices of red chili, labuyo chili, and shallot.

The second-highest contributor to the inflation was the core component due to the increase in wages for domestic helpers, powder and liquid detergent, as well as house rental fee which contributed 0.12 percent.

Meanwhile, the price component regulated by the government contributed 0.05 percent to the inflation due to the rise in tariff for airlines and cigarettes.

On the same occasion, he also noted that the number of tourists visiting Indonesia in May 2022 jumped 1,382.45 percent yoy to reach 212.33 thousand visits, a record clocked since the start of the pandemic in 2020.


Category: Indonesia

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