Jakarta (ANTARA) - The government needs to start preparing strategies to check the increase in inflation until the end of the year, given the high inflation recorded in June 2022, an economic observer has said.

One of the exit strategies is to be aware of the movement of global commodity prices, such as wheat and oil, which are affected by geopolitical conditions in Europe.

"The effect is accidental. Therefore, we need a short-term accidental solution only to reduce the temporal price volatility. For example, in the midst of the current increase in global commodity prices," Agus Herta Sumarto from the Institute for Development of Economics and Finance (Indef) said when contacted here on Monday.

Second, the government also needs to consider and make a food security road map, especially for foodstuffs that have often been the main cause of inflation in Indonesia.

"Problems with foodstuffs such as soybeans, corn, cayenne pepper, shallots, garlic, chicken eggs, meat, and chicken often occur and repeat, starting from the upstream to downstream sectors," he noted.

Third, the government must carry out comprehensive cross-sectoral improvements from the upstream sector in the Agriculture Ministry to the downstream sector in the Trade Ministry and the Industry Ministry.

"This can't be done instantly, but it will take more time. However, this can be done. It only requires political will from the government," Sumarto said.

High inflation could create uncertainty and disrupt growth potential, so the government must increase vigilance against a possible increase in inflation until the end of 2022, he added.

"I think the biggest challenge facing the Indonesian economy today is the potential for stagflation, an increase in inflation in the midst of stagnant or even contracting economic growth," he said.

The Central Statistics Agency (BPS) had earlier pegged annual inflation at 4.35 percent in June 2022, or slightly higher than the projected 4 percent plus minus one percent. The inflation level was the highest on record since June 2017.

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Translator: Katriana
Editor: Rahmad Nasution
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