Declining Fuel Prices and Grand Harvest Ease Inflation in April

The yearly inflation rate of 3.6 percent suggested that consumer price index remained under control of the government and the central bank within a range of 3 and 5 percent, the deputy director of Bank Indonesia communication department, Andiwiana, said here on Monday.

The threat of inflation from administered prices has eased in the wake of a decline in fuel oil prices, public transportation fares, and electrical power tariffs in April 2016, he said.

The administered prices recorded a deflation of 1.7 percent on a monthly basis and a deflation of 0.84 percent on a yearly basis, he said.

Meanwhile, a grand harvest in several production centers led to adequate supplies and thus helped control the volatile food prices, he said.

The central bank noted that the prices of fresh fish, purebred chicken meat and bird eye chili fell throughout April 2016.

"The volatile foods recorded a deflation of 1.04 percent (month-on-month) or saw an inflation of 9.44 percent year-on-year," he said.

BI believed that the core inflation of 0.15 percent month-on-month, or 3.41 percent year-on-year, is relatively low.
But it added that "limited domestic demand" had triggered the expectation of low inflation.

"Coordination between the government and Bank Indonesia regarding policy formulation to keep inflation in check will be strengthened. In the short run, it will focus on efforts to control inflation rate ahead of the fasting month and subsequent festivities called Lebaran," he said.

Separately, Coordinating Minister for Economic Affairs Darmin Nsaution said the national inflation rate till April 2016 is still below the governments limit.

The government has set the assumed inflation rate cap in the 2016 state budget at 4.7 percent.(WDY)