JAKARTA: Inflation in Indonesia has marginally reduced but is sustained at a relatively high level on account of persistently rising food prices as the weather phenomenon El Nino bites into harvest yields.
Statistics Indonesia (BPS) official Ateng Hartono revealed in a press conference that the consumer price index (CPI) growth in October touched 3.23% year-on-year (y-o-y), marginally easing down from 3.28% in the preceding month.
The reading was still within Bank Indonesia’s (BI) inflation target range of 1.5% to 3.5%.
Two of the top-three commodity groups that drove the CPI growth the most were transportation, by virtue of price increases in gasoline, airfares and engine oil, and personal care and other services primarily because of gold jewellery, said Ateng.
However, the heaviest hitter was the food, beverages and tobacco group, he revealed, pointing specifically to chilies, fresh fish, rice, cooking oil and broiler chicken meat.
Ateng said red and bird’s eye chili harvests declined in some of the regional production hubs although several others recorded increases.
October’s volatile food inflation, one component that together with core inflation and administered price inflation built up the headline figure, was recorded at 5.81%.
Volatile food inflation represents the price growth of food commodities that are particularly susceptible to supply and demand shocks like harvest cycles, weather disruptions and distribution bottlenecks.
It had been consistently climbing since July but was still lower than the same month last year at 6.89%, as well as this May at 6.24%. Rice, the main volatile food commodity, always bears a significant weight in inflation calculation given its status as the country’s staple food and it has been climbing constantly since February.
BPS data revealed that the rice price in wholesale markets had climbed by 5.13% y-o-y, and 4.1% y-o-y at the retail level.
The price increase was primarily impacted by poorer harvests due to low rainfall brought about by El Nino, which has caused droughts in certain areas.
The country was overrun by a strong El Nino in 2023, during which volatile food inflation peaked at 7.6% in November, although headline inflation was contained at 2.86%. Many experts and meteorological bodies have warned that this year’s El Nino could be the strongest ever, on account of which BPS has projected lower rice harvests throughout September to December than in the past two years.
The Meteorology, Climatology, and Geophysics Agency described September’s national rainfall level as low but defined October as low-to-medium and forecast November to be medium-to-high.
BPS expects this year’s harvest area to decline by some 540,000 ha and the total production down by 1.59 million tonnes compared with last year. Ateng did not present the data but his presentation slide had information that said the agricultural, forestry and fishery sectors impacted inflation at the wholesale level, which in October reached 7%. — The Jakarta Post/ANN
