Cost of consumer goods on the rise in Indonesia
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Prices of consumer goods in Indonesia rose in March on an annual basis as supply constraints continued to shore up prices of raw food, particularly certain kinds of spices, following a similar trend last month.
A lack of shallots, garlic and chilli – the main seasoning ingredients in Indonesian food – as a result of lower output attributable to weather conditions plus the government’s stricter policy on horticultural imports, pushed the consumer price index (CPI) up by 0.63 per cent in the third month of the year.
This caused year-on-year inflation to edge higher to 5.9 per cent during the month, breaching the upper limit of the central bank’s target of 5.5 per cent, the Central Statistics Agency (BPS) announced on Monday.
Shallots and garlic contributed to 0.44 per cent and 0.2 per cent respectively, while bird’s-eye chilli contributed 0.05 per cent to the food commodities’ basket that made up 2.04 per cent of the total headline inflation.
“There should be significant efforts by the government to control prices so inflation targets can be met,” BPS chief Suryamin said at a press conference.
Core inflation, which excludes volatile food and government-adjusted prices, gained 0.13 per cent, prompting inflation to rise to 4.21 per cent on an annual basis, BPS said.
The rises in headline and core-inflation rates are a seasonal concern and, thus, do not necessarily require monetary policy tightening, economists say. Bank of Indonesia’s (BI) board of governors will meet on April 11 to determine the direction of the country’s monetary stance.
“Despite higher-than-expected headline inflation in March, core inflation remains well-anchored and we don’t think BI will hike any of its policy rates this month,” Citibank Indonesia economist Helmi Arman said in the bank’s analysis of the inflation data.
BI, which has an inflation-targeting monetary policy, held its benchmark rate at the historically low 5.75 per cent for the 13th consecutive month during its latest meeting last month, despite a surge in inflation to a 20-month high of 5.3 per cent in February.
