Indonesia's Inflation Eases in July 2023, Reaching its Lowest Point This Year

According to a report by the Central Bureau of Statistics (BPS), Indonesia experienced a year-on-year (yoy) inflation rate of 3.08% in July 2023. This rate has continued to slow since March 2023, marking the lowest inflation rate so far this year.

Indonesia's domestic inflation has now reached the Bank Indonesia (BI) target range of 3% to 4% for 2023.

"Maintaining inflation within the target range is due to the consistency of monetary policy and the close synergy in inflation control between Bank Indonesia and the Government (Central and Regional) within the Central and Regional Inflation Control Team (TPIP and TPID) through the strengthening of the National Movement for Food Inflation Control (GNPIP) in various regions," BI stated in a press release on Tuesday (1/7/2023).

"Looking ahead, Bank Indonesia believes that inflation will remain controlled within the target range of 3.0 ± 1% for the remainder of 2023 and 2.5 ± 1% in 2024," it continued.

BPS noted that the commodities contributing significantly to the annual inflation in July 2023 were rice, fresh fish, broiler chicken, garlic, chicken eggs, white cigarettes, filter kretek cigarettes, kretek cigarettes, and household fuel.

The July 2023 inflation rate was also influenced by price increases in rent, house contracts, domestic helper wages, intercity transportation fares, intra-city transportation fares, solar fuel, gasoline, tuition fees, elementary school fees, rice with side dishes, and gold jewelry.

Meanwhile, commodities contributing to deflation (price decrease) in July 2023 included red chilies, cayenne peppers, shallots, tomatoes, green chilies, white cabbage, cooking oil, liquid/dish soap, airfare, mobile phones, and color televisions.

Looking at expenditure groups, Indonesia's year-on-year inflation in July 2023 was highest in the transportation sector. The details are as follows:

* Transportation: 9.58% (yoy)
* Personal care and other services: 3.98% (yoy)
* Food and beverage services/restaurants: 3.08% (yoy)
* Education: 3.07% (yoy)
* Health: 2.69% (yoy)
* Household equipment, appliances and routine maintenance: 2.37% (yoy)
* Housing, water, electricity, and household fuel: 2.03% (yoy)
* Recreation, sports, and culture: 2.02% (yoy)
* Food, beverages, and tobacco: 1.90% (yoy)
* Clothing and footwear: 1.42% (yoy)

Only one expenditure group experienced year-on-year deflation in July 2023: the information, communication, and financial services sector, with a deflation of 0.24% (yoy).