Bank Indonesia estimates that the monthly inflation rate in March will be 0.13%. Inflation was contributed by an increase in the price of gold jewelry. Inflation estimates based on the price monitoring survey up to the fourth week of March also recorded inflation in the calendar year of 0.8% and an annual basis of 3%. As for some commodities that experienced price increases from the previous week, including gold jewelry, granulated sugar, oranges, and shallots.
In detail, gold jewelry contributed 0.06% inflation, 0.04% orange, 0.03% chicken eggs, 0.03% sugar, 0.02% onion, and water spinach, spinach, rice with side dishes and household fuels of 0.01% each
Meanwhile, some commodities contributed to deflation, namely red chili by 0.09%, cayenne pepper by 0.03%, and garlic, tomatoes, broiler chicken meat, cooking oil and air transportation respectively by 0.01%.
Under these conditions, BI predicts that 2020 inflation will remain under control and be on the inflation target of 3% plus-minus 1%. BI will continue to strengthen coordination with the government and the Financial Services Authority to closely monitor the dynamics of the spread of the coronavirus and its impact on the Indonesian economy from time to time.
Rupiah Weakening Against Inflation
Previously, the BI Governor estimated that entrepreneurs would not raise their selling prices so that inflation would be maintained. "I'm not sure the corporate sector will raise prices because of the weakening rupiah," Perry said in Jakarta, Thursday (3/26).
The rupiah exchange rate in the spot market trading since the beginning of the year until today has weakened 17% to the position of Rp 16,305 per US dollar. However, the Governor of Bank Indonesia estimates that entrepreneurs will not increase their selling prices so that inflation will be maintained. "I'm not sure the corporate sector will raise prices because of the weakening rupiah," Perry said in Jakarta, Thursday (3/26).
Perry believes the impact of the weakening of the rupiah is very low on inflation. Until now, it appears that there has not been a surge in commodity prices on the market.
He explained that four things made BI confident that the impact of the weakening of the rupiah on inflation was minimal. First, the availability of sufficient supply. "The effect of inflation from food is minimal," he said.
Second, when compared to the aggregate demand and supply sides of the economy, the increase in demand can be met from an increase in supply. Thus the negative output gap to inflation.
Inflation Increases Because There Is An Increase In Food Materials
Third, BI is optimistic about monetary policy to ensure the inflation target is achieved, including close coordination with the central and regional inflation control teams. Fourth, the weakening of the rupiah is believed to be only temporary due to global growth. "Once there is clarity regarding Covid-19 and economic policies, the rupiah will strengthen again. So the weakening of the rupiah is temporary," he said.
Previously, the Central Statistics Agency noted, February inflation reached 0.28% every month, lower than January's 0.39%. Inflation was contributed by price increases in many food items such as garlic and red chili peppers, to cigarettes.
Deputy for Distribution and Services Statistics Yunita Rusanti explained that inflation in the calendar year reached 0.66%, while on an annual basis it was 2.98%. Inflation occurred in 90 cities of the consumer price index, while 17 CPI cities experienced deflation.
"February inflation is relatively more stable than January, but February 2019 there was a deflation of 0.08%," said Deputy Field at a Press Conference in his office, Jakarta, Monday (2/3).
Apart from the rupiah, the majority of Asian currencies strengthened against the US dollar. Citing Bloomberg, the Japanese yen rose 1.18%, the Singapore dollar 0.62%, the Taiwan dollar 0.11%, the Philippine peso 0.12%, the Indian rupee 1.01%, the Chinese yuan 0.35%, the Malaysian ringgit 1, 16%, and Thai baht 0.26%.
