"The CPI deflation during the reporting period primarily stemmed from volatile food (VF) deflation and lower core inflation in spite of a moderate build-up in inflationary pressures on administered prices," Executive Director of the BI Communication Department Onny Widjanarko noted in a statement received in Jakarta on Saturday.
Hence, as of September 2019, the CPI inflation in 2019 stood at 2.20 percent year-to-date (ytd), or 3.39 percent year-on-year (yoy) annually, decreasing from 3.49 percent yoy in August 2019.
Venturing ahead, BI will make consistent efforts toward the maintenance of price stability and fortify policy coordination with the central and local governments to keep inflation under check.
The BI has projected inflation in 2019 to lie below the midpoint of the target of 3.5 percent, give or take one percent, while maintaining inflation within the target corridor for 2020 at three percent, give or take one percent.
Widjanarko noted that a lower core inflation had aided in controlling the CPI inflation within the target range. Core inflation was recorded at 0.29 percent mtm during the reporting period, a 0.43 percent mtm drop from the month earlier.
Lower core inflation stemmed from the main contributors, including gold jewelry, education services, and house rentals.
On an annual basis, core inflation was recorded at 3.32 percent yoy, relatively stable as compared to 3.30 percent yoy during the previous period, he remarked.
Core inflation was controlled due to anchored inflation expectations resulting from policy consistency by BI to maintain price stability and manage aggregate demand, as well as the rupiah exchange rates moving in line with the currency's fundamental value and the minimal impact of global prices.
Widjanarko stated that VF had experienced another period of deflation, deepening to 2.26 percent mtm, from 0.25 percent mtm during the earlier month.
VF deflation was chiefly attributed to the lesser prices of various chili varieties, garlic and shallots, purebred chicken meat, purebred chicken eggs, fresh fish, and vegetables. In the meantime, rice experienced controlled inflation.
He noted that on a yearly basis, VF inflation was recorded at 5.49 percent yoy, decreasing from 5.96 percent yoy during the previous period.
Administered prices experienced mild inflationary pressures. In September 2019, AP inflation was recorded at 0.01 percent mtm, after undergoing a 0.40 percent (mtm) deflation the month earlier.
The chief contributors to AP inflation were cigarette prices, while airfares recorded another period of deflation, as seasonal demand continued to dwindle, Widjanarko remarked.
Yearly, administered prices recorded an inflation of 1.88 percent yoy as compared to 1.87 percent yoy during the previous period.
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Reporter: Azis Kurmala
Editor: Sri Haryati
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