The declining trend of inflation rate is caused by the low core inflation, coupled with the low pressure of imported goods and domestic demand, BI Governor Agus Martowardojo stated in a press conference here on Thursday night.
"By the end of 2017, the inflation is expected to remain low at 3-3.5 percent," he noted.
Indonesia`s inflation stood at 3.02 percent year-on-year in 2016.
The central bank believed that the inflationary pressure from volatile foods will remain under control until the end of this year mainly due to control in the supply of goods, which will eventually lead to price stability.
The administered prices of goods will also remain under control, he remarked.
In October 2017, the monthly inflation rose by 0.01 percent, bringing the annual inflation to 3.58 percent.
Despite the low inflation rate, household consumption slowed down.
Meanwhile, BI Deputy Governor Perry Warjiyo pointed out that the low inflation rate should have increased the people`s purchasing power. However, the purchasing power is highly dependent on the economic recovery.
"In fact, economic recovery is ongoing, and household consumption continues to improve though in an uneven manner," he stated.
The increase in household consumption is reflected by an 18.1 percent rise in the sales of motorcycles in the third quarter of 2017, while car sales grew 7.8 percent, and retail sales increased five to six percent, he added.
Reported by Indra Arief Pribadi