Indonesia Inflation Rate Drops as Transportation Prices Fall

FEBRUARY 02, 2015

A man adjusts the oil price tag on a board of a fuel station in Jakarta. (AFP Photo/Bay Ismoyo)

Jakarta. Indonesia's inflation rate decelerated in January on lower transportation prices, following the government's move to reduce fuel prices amid lower oil prices globally.

The consumer price index (CPI) eased to 6.96 percent year-on-year, according to the Central Statistics Agency (BPS) on Monday. This compared to 8.36 percent in December last year.

Services in transportation, communication and the financial sector saw a 4.04 percent deflation in January, while prices in other groups — such as staple food and processed food — increased, according to the BPS.

The Indonesian government announced in the beginning of January that it would only subsidize diesel, cutting the subsidy of low-octane Premium gasoline in the beginning of January. It subsequently reduced the prices of both subsidized diesel and Premium fuel by an average 14 percent in mid-January as global oil prices continues to plunge.

Monthly CPI saw a 0.24 percent deflation in January from a 2.46 percent inflation in December last year, the BPS reported. Still, core inflation — which eliminates prices of food and fuel due to their volatility — picked up slightly to 4.99 percent year-on-year, compared to 4.93 percent in December last year.