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CNA Explains: Why Indonesia’s inflation rate has jumped to a 7-year high
JAKARTA: Indonesia’s inflation rate has continued to climb, reaching 4.94 per cent year-on-year in July.
The July figure is the country’s highest inflation rate since October 2015. Back then, it was 6.25 per cent.
This comes amid soaring food and energy prices globally as well as crop failures domestically, according to Mr Margo Yuwono, head of the Indonesian statistics agency.
“Global commodity prices, as well as some situations that occured domestically such as rainfall and several government policies related to energy policy, have affected our inflation in July 2022,” said Mr Yuwono on Aug 1 when he announced the latest inflation rate.
He pointed out that the major contributors to rising inflation include hikes in the prices of chillies and shallots as a result of crop failures amid recent heavy rainfall.
Higher airfares and cost of household fuel were also among the factors leading to higher inflation, said Mr Yuwono.
On the ground, people have been feeling the pinch. Many food vendors are left with little option but to raise their prices. Some have also opted to use less sambal for the time being, as chillies and shallots, which are key ingredients of the sauce, are more expensive now.
In January, Indonesia’s inflation rate was 2.18 per cent. By April, it reached 3.47 per cent.
In May, it increased slightly to 3.55 per cent before climbing to 4.35 per cent in June.
The June and July figures are above the central bank’s inflation rate target of between 2 per cent and 4 per cent.
Analysts interviewed by CNA said the current inflation rate is brought about by an accumulation of several factors in the past few months.
Looking ahead, they expect the inflation rate to continue edging upwards.
Source: https://www.channelnewsasia.com/asia/cna-explains-why-indonesia-high-inflation-rate-2861616