Inflation under control, manufacturing demand soared: Minister

Inflation under control, manufacturing demand soared: Minister

Coordinating Minister for Economic Affairs Airlangga Hartarto delivered a keynote speech at the webinar “Managing The Risk of Bribery Amidst the Pandemic in the Private Sector”, Tuesday (Aug 31, 2021) (ANTARA/HO-Coordinating Ministry for Economic Affairs)

Core inflation that remains elevated in August 2021 is a positive thing. However, it still needs to be monitored, given that domestic demand is not yet fully strong
Jakarta (ANTARA) - Inflation in August was under control, while demand in the manufacturing sector increased, according to Coordinating Minister for Economic Affairs Airlangga Hartarto.

"This was reflected in the purchasing manager index (PMI) in August that also increased to 43.7. This level indicates an increase in performance in the manufacturing sector as compared to the PMI level of 40.1 in the previous month," Hartarto noted in a statement here on Wednesday.

The minister remarked that Indonesia's PMI level was better than several countries in the ASEAN, such as Myanmar at 36.5, Vietnam at 40.2, and Malaysia at 43.4.

"The increasing level of Indonesia's PMI shows the potential for increasing demand, which is accompanied by an increase in output capacity and employment," he noted.

The improvement in PMI levels in August 2021 is in line with the implementation of restrictions on community activities (PPKM) that are increasingly effective, so that the rate of COVID-19 transmission continues to decline. Various COVID-19 control programs and ongoing economic recovery by the government are also expected to boost demand to a better level and accelerate output in the manufacturing sector.

"This condition increases the expectations of manufacturing companies that production in the next 12 months is expected to reach an optimistic level," according to the minister.

Inflation in August 2021 remained under control, at 0.03 percent, as compared to the previous month, or 1.59 percent, in comparison with the corresponding period in the previous year. The inflation was mainly contributed by the core inflation component of 0.14 percent. Core inflation in August increased to 0.21 percent as compared to 0.07 percent in July 2021.

"Core inflation that remains elevated in August 2021 is a positive thing. However, it still needs to be monitored, given that domestic demand is not yet fully strong," according to Hartarto.

Regarding the volatile food component that experienced deflation of minus 0.64 percent as compared to the previous month and 3.80 percent from the corresponding period in the previous year, Hartarto noted that the government will continue to guarantee supply and maintain smooth distribution amid restrictions on community activities.

"The realization of volatile food inflation on an annual basis was still in line with the agreed target of three to five percent as compared to the same period in the previous year. In future, adequate supply and smooth distribution will continue to be maintained through close synergy between the central and regional governments, Bank Indonesia, and all stakeholders to support the achievement of inflation in 2021," he added.

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