"Based on the monitoring survey of the fourth week of May, we expect inflation to be very low — at 0.09 percent," Bank Indonesia Governor Perry Warjiyo told a virtual press conference on Thursday in Jakarta.
The BI Governor said the low inflation could be attributed to lower public demand during Ramadhan this year in the wake of the COVID-19 pandemic.
This is in complete contrast to increased consumption recorded during Ramadhan last year as many people still shopped for clothes and frequented restaurants.
"The demand for goods and services is low, seen from the decline in economic and social activity," Perry Warjiyo noted.
Another factor that contributed to the low inflation in May was a drop in global commodity prices, which affected the fall in prices of imported goods.
In addition, inflation is also influenced by the stability of the exchange rate that is still maintained and inflation expectations that continue to be maintained through close coordination between stakeholders.
"The coordination between the government and BI is going very well, so prices are under control and there are no problems in terms of stability," Perry Warjiyo declared.
With this projection, he said, BI is optimistic that the inflation rate at the end of 2020 will be within three percent, plus minus one percentage point around the official target.
Earlier, in April this year, the Central Statistics Agency (BPS) had recorded inflation at 0.08 percent, or sloping compared to the period ahead of Ramadhan in previous years.
Usually, inflation increases ahead of and during Ramadhan due to high public demand.
In 2019, monthly inflation in the period leading up to and during Ramadhan was recorded at 0.68 percent (May) and 0.55 percent (June). (INE)
Related news: BI projects 0.18 percent inflation rate in April 2020
Related news: Indonesia's inflation under control, at 0.10 percent in March 2020
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Translator: Satyagraha, Azis Kurmala
Editor: Suharto
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