INFLATION RATE IN INDONESIA

In simple terms, inflation is understood as a persistent, ongoing rise across a broad spectrum of prices. An increase in prices for one or two goods alone can’t be described as inflation unless that increase spreads to (or leads to escalating prices for) other goods. The reverse of inflation is deflation.

The indicator commonly used to measure the level of inflation is the Consumer Price Index (CPI). Changes in the CPI over time are indicative of price movements for packages of goods and services consumed by the public. Since July 2008, the packages of goods and services in the CPI basket have been based on the 2007 Cost of Living Survey conducted by the Statistics Indonesia (BPS). Following this, BPS monitors price movements for these goods and services in selected cities and towns each month, using information from traditional markets and modern retail outlets on specific categories of goods and services in each location.

Other inflation indicators used in international best practice include:

1. Wholesale Price Index. The wholesale price for a commodity is the price of transactions taking place between the first wholesaler and the next largest trader for large quantities on the first market for a commodity. [More detailed explanations of the Wholesale Price Index can be found at the Statistics Indonesia (BPS) website: http://dds.bps.go.id/eng/]
2. The Gross Domestic Product (GDP) Deflator illustrates the measurement of price levels for the final goods and services produced within an economy. The GDP Deflator is derived by dividing GDP based on nominal prices by GDP based on constant prices.

The inflation rate in Indonesia was recorded at 7.75 percent in February of 2014. Inflation Rate in Indonesia is reported by the Statistics Indonesia. Inflation Rate in Indonesia averaged 11.61 Percent from 1997 until 2014, reaching an all time high of 82.40 Percent in September of 1998 and a record low of -1.17 Percent in March of 2000. In Indonesia, the consumer price index is based on a survey conducted in 66 cities. The indicator consists of 774 commodities classified into 7 major groups. Housing, water, electricity, gas and fuel constitute 25.5 percent of total weight; Food stuff - 19.5 percent and Transportation, communication and financial services - 19 percent. Prepared food, beverage, cigarette and tobacco accounts for 16.5 percent of total weight; Education, recreation and sports accounts for 8 percent; Clothing for 7 percent and Medical care for the remaining 4.5 percent. This page provides - Indonesia Inflation Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news

indonesia inflation rate

Tables and CPI Inflation in Indonesia in 2011 - 2014 by Month

BULAN	TAHUN 2011		TAHUN 2012		TAHUN 2013		TAHUN 2014
	IHK	INFLASI	IHK	INFLASI	IHK	INFLASI	IHK	INFLASI
Jan	126.29	0.89	130.9	0.76	136.88	1.03	110.99	1.07
Feb	126.46	0.13	130.96	0.05	137.91	0.75	111.28	0.26
Mar	126.05	-0.32	131.05	0.07	138.78	0.63	N.A	N.A
Apr	125.66	-0.31	131.32	0.21	138.64	-0.1	N.A	N.A
Mei	125.81	0.12	131.41	0.07	138.6	-0.03	N.A	N.A
Jun	126.5	0.55	132.23	0.62	140.03	1.03	N.A	N.A
Jul	127.35	0.67	133.16	0.7	144.63	3.29	N.A	N.A
Agt	128.54	0.93	134.43	0.95	146.25	1.12	N.A	N.A
Sep	128.89	0.27	134.45	0.01	145.74	-0.35	N.A	N.A
Okt	128.74	-0.12	134.67	0.16	145.87	0.09	N.A	N.A
Nov	129.18	0.34	134.76	0.07	146.04	0.12	N.A	N.A
Des	129.91	0.57	135.49	0.54	146.84	0.55	N.A	N.A
Tahunan		3.79		4.3		8.38

 Indonesia Core inflation Rate

Core Inflation Rate in Indonesia increased 4.57 percent in February of 2014 over the same month in the previous year. Core Inflation Rate in Indonesia is reported by the Statistics Indonesia. Core Inflation Rate in Indonesia averaged 4.66 Percent from 2008 until 2014, reaching an all time high of 8.29 Percent in December of 2008 and a record low of 3.56 Percent in March of 2010. In Indonesia, the core inflation rate tracks changes in prices that consumers pay for a basket of goods which excludes some volatile price items. This page provides - Indonesia Core Inflation Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

indonesia core inflation rate

In Indonesia, CPI inflation is disaggregated into:

1. Core Inflation, i.e. the persistent component within inflation movement, influenced by fundamentals such as

• Supply-demand interaction
• External environment: exchange rate, international commodity prices, trading partner inflation
• Trader and consumer expectations of inflation.

2. Non-Core Inflation, i.e. the inflation component marked by volatility due to the influence of non-fundamentals. The non-core components of inflation are:

1. Volatile Foods:
   Inflation predominantly influenced by shocks in the food stuffs category, such as harvests,​ Disruptions from natural events or movements in domestic food commodity prices and international Food co​mmodity prices.
2. Administered Prices:
   Inflation predominantly influenced by shocks from government-announced prices, such as for​​ Subsidized fuels, electricity billing rates, transport fares and so on.

Inflation Determinants

Inflation arises from pressures on the supply side (cost push inflation), on the demand side (demand pull inflation) and inflation expectations. Factors driving cost push inflation arise from exchange rate depreciation, the impact of inflation in foreign countries and especially trading partners, increases in administered prices1 and negative supply shocks2 brought about by natural disasters and disruptions to distribution. Demand pull inflation is driven by high demand for goods and services relative to supply. Within the macroeconomic context, this condition is illustrated by real output in excess of potential output or aggregate demand beyond the capacity of the economy.

On the other hand, the inflation expectations factor is influenced by the behavior of the public and economic actors in applying expected inflation figures in their economic activities. These inflation expectations may tend to be adaptive or forward looking. Reflecting this is the price forming behavior at the producer and trader levels, especially in the period leading up to major religious festivities (Eid-ul-Fitr, Christmas and New Year) and when new rulings are issued on the regional minimum wage. Although the general availability of goods is seen as adequate to cope with increased demand, prices of goods and services at times of religious festivities mount beyond the levels explained by the supply-demand condition. Similarly, when new rulings are issued on the regional minimum wage, traders also raise prices even though the wage increase has only modest significance in fuel-ling increased demand.

Coordination Control of Inflation

Low and stable inflation is a prerequisite for the public welfare. Meanwhile, Indonesia's inflation pressure source not only from the demand side that can be managed by Bank Indonesia. From the research, the characteristics of inflation in Indonesia are still inclined turbulent mainly influenced by the supply side (supply side) with regard to impaired production, distribution and government policy. In addition, shocks to inflation may also come from government policies related to strategic commodities prices such as BBM and other energy commodities (administered prices).

Based on the characteristics of inflation is still vulnerable to shocks, to achieve low inflation, inflation control requires cross-agency cooperation and coordination, ie, between Bank Indonesia and the Government. Hopefully with the harmonization and synchronization policies, low inflation and stable can be achieved, which in turn supports the welfare of the community.

Coordination between Bank Indonesia and Government in Control Inflation

Recognizing the importance of the role of coordination in order to achieve low and stable inflation, the government and Bank Indonesia to set up a Monitoring and Control of Inflation (TPI) at the level of the center since 2005. Strengthening coordination and then proceed with forming Inflation Control Team at the regional level (TPID) in 2008. Furthermore, to bridge the tasks and role of the central level TPI and TPID in the area, then in July 2011 to form the National Working Group (Pokjanas) TPID is expected to be a catalyst to strengthen the effectiveness of the role of TPID. Membership Pokjanas TPID is Bank Indonesia, CMEA and MOHA.