Indonesia: Inflation may be below 3.5% in 2018: BI – 28 Aug 2017

  • Bank Indonesia has said the 2018 inflation rate could be below 3.5% if the government did not increase administered prices and could control food price volatility. “The figure of BI’s [inflation rate] projection is slightly below 3.5%,” the Bank Indonesia governor’s assistant for economic policy and monetary affairs, Dody Waluyo, said.
  • The low inflation rate assumption will happen if the government does not increase several administered prices, including subsidized fuel prices, electricity rates and natural gas prices in 2018.
  • “The government’s decision not to increase the price of fuel, electricity and natural gas will make the inflation rate controllable,” said Dody, adding that the government should also be able to control inflation arising from the food price volatility.
  • He said the government and BI had to coordinate closely to ensure the price stability for rice, meat, chili, sugar and other staple foods.
  • BI had initially set its inflation rate assumption at between 3 and 4% for 2017 and between 2.5 and 3.5% in 2018, while the government’s estimated inflation rate was 3.5% as stated in the draft 2018 state budget. Meanwhile, the inflation rate assumption was 4.3%, as stated in the 2017 revised state budget.
  • The Central Statistics Agency recorded that the inflation rate from Jan 17 to Jul 17 reached 2.6%, or a 3.88% y/y increase.

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