The Indonesian Minister of Finance Sri Mulyani Indrawati has been outspoken about the causes of Indonesia’s rising inflation rate in recent times. According to him, the development of domestic inflation is something that the Financial System Stability Committee (KSSK) pays close attention to. “The rate of inflation shows an increasing trend, due to the supply side, along with the increase in world commodity prices, and there are supply disruptions in the domestic market,” he said at the quarterly KSSK press conference held Monday (1/8/2022).
Sri Mulyani said the inflation rate in July 2022 was recorded at 4.94 percent (year-on-year/yoy). This figure is an increase compared to June 2022, which was recorded at a level of 4.35 percent (yoy). Meanwhile, the position of inflation at the end of the first quarter of 2022 is still at 2.4 percent (yoy). Despite rising inflation, Sri Mulyani said core inflation was maintained at 2.86 percent (yoya). “This is supported by the consistency of Bank Indonesia [BI] policies in maintaining Indonesia’s inflation expectations.
Synergy and coordination related to inflation control, he said, was carried out by BI together with the government, including by increasing coordination and synergy in the central inflation control forum and the Regional Inflation Control Team (TPID). He explained that inflation in the volatile food category has increased, mainly due to rising global food prices and supply disruptions due to weather. Meanwhile, inflation in administered prices increased, influenced by the increase in air transport ticket prices.
Inflationary pressures due to the very high increase in global energy prices were not transmitted to the country in administered prices, prices for oil, gas and electricity. “This is the result of the government’s policy to maintain the selling price of energy in the domestic market through an increase in electricity and energy subsidies, fuel and LPG, which are allocated by the state budget,” said Sri Mulyani. With this step, Sri Mulyani compared Indonesia’s inflation conditions compared to countries with a group or level, such as Thailand at 7.7 percent, India at 7 percent, the Philippines at 6.1 percent.