Indonesia is preparing for greater inflation

[ASEAN NOW Content Team]

 

After a lengthy period of relatively steady pricing under President Joko Widodo, Indonesia expects increased inflation.

The country's statistics agency confirmed signs of an increase on Wednesday (Feb 2), announcing that annualised inflation in January was 2.18 percent, the highest since May 2020, with food, housing, and household equipment as the primary drivers.
Inflation was 1.87 percent in 2021.

 

"Higher inflation was caused by increases in the price of commodities and other foods due to wetter weather (which harmed crops)," Mr Febrio Kacaribu, head of the fiscal policy office at the finance ministry, said on Thursday when commenting on the January figure.

 

He also mentioned that costs had risen as a result of increased customer demand following the relaxation of Covid-19 limits.

Mr Febrio stated that the government was attempting to maintain control of the situation by making domestic energy prices, particularly gasoline, affordable at home.

The price of crude oil has risen, but the Indonesian government has partially absorbed the increase to keep gasoline inexpensive at home.
Critics argued that this went against Mr Widodo's promise early in his presidency that such costs would be left to the foreign market to avoid putting strain on the government's budget.

 

Mr Widodo's administration, which took office in 2014, has been credited with lowering inflation, mostly through market intervention and fixing inefficiencies in the archipelago's logistics.

 

Between 2009 and 2020, Indonesia's average annual inflation rate was 4.6 percent, down from 9.5 percent between 2001 and 2008.

Mr Widodo's administration has published a total of 12 regulations governing food price caps, which is a contentious topic.
Many individuals in the 270 million-strong country spend more than half of their disposable income on food, and rising costs, if not addressed, might lead to political unrest.

 

Mr Widodo's government has also sought to enhance distribution across the country, constructing 1,298 kilometres of toll roads in his first five years in office, according to data from the Ministry of Public Works.
Around 250 kilometres were built in 2020, and about 300 kilometres in 2021.
Only 795 kilometres were developed between 1978 and 2014.

 

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