BI Committed to Controlling Inflation in 2021

Jakarta: Based on data published by the Central Statistics Agency (BPS), Indonesia's Consumer Price Index (CPI) in July 2021 recorded 0.08% (mtm) inflation after a period of 0.16% (mtm) deflation in June 2021.  
 
"Consumer price inflation was driven by volatile food and administered prices amidst lower core inflation," said BI Communication Department Head Erwin Haryono in a press release on Monday.
 
Annually, headline inflation stood at 1.52% (yoy) in the reporting period, up from 1.33% (yoy) one month earlier.  

"Moving forward, Bank Indonesia remains firmly committed to maintaining price stability and strengthening policy coordination with the central and regional governments to control inflation in 2021 in line with the 3.0%±1% target corridor," he stated.
 
Core inflation in July 2021 was recorded at 0.07% (mtm), down from 0.14% (mtm) in the previous period.  In general, a muted demand recovery subdued by mobility restrictions to curb the recent surge of delta variant Covid-19 infections contributed to lower core inflation.  By commodity, core inflation was influenced by deflationary pressures on gold jewellery in line with the global gold price correction.  Annually, core inflation stood at 1.40% (yoy) in July 2021, falling from 1.49% (yoy) in June 2021.  Persistently low core inflation is explained by compressed domestic demand, maintained exchange rate stability and policy consistency by Bank Indonesia to anchor inflation expectations.
 
Inflationary pressures on volatile food (VF) intensified to 0.14% (mtm) in July 2021 after a period of 1.23% (mtm) deflation recorded one month earlier.  Decreasing supply at the onset of the planting season, coupled with inclement weather experienced at several production hubs, edged up horticultural prices as the main contributor to VF inflation.  Annually, VF inflation increased to 2.97% (yoy) in the reporting period from 1.60% (yoy) previously.
 
Administered prices (AP) in July 2021 recorded 0.05% (mtm) inflation after experiencing 0.21% (mtm) deflation the month earlier. AP inflation primarily stemmed from higher filtered clove cigarette prices as the government hike on excise duties for tobacco continued to feed through to retail prices.  Annually, AP inflation increased to 0.61% (yoy) in the reporting period from 0.49% (yoy) previously.
 
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