A no smoking sign at a shopping mall in Jakarta last year. (JG Photo/Sheryl Yehovia)

Inflation Picks Up as Impact of Tobacco Excise Increase Kicks In

BY :BERITASATU

MARCH 02, 2020

Jakarta. Inflation accelerated in February thanks to rising prices of cigarette and tobacco products, the Central Statistics Agency, or BPS, said on Monday. 

The composite price index, a broad measure of all the prices of goods and services being sold in the country, rose 2.98 percent last month from 2.68 percent in January. 

Prices of food, beverages and tobacco products jumped 6 percent in February from the same month a year ago, accounting for most of the month's inflation.

The government raised the excise on cigarettes by 23 percent in January as part of its effort to curb tobacco consumption and boost revenue for the state coffers. 

Self-care products also saw a 4.6 percent increase in price followed by a 3.8 increase in education costs.

Transportation costs continue its downward trend with a reading of 0.3 percent lower than a year ago.

Core inflation, which did not include prices of volatile raw foods and government-administered prices like gasoline or gas, slowed down to 2.78 percent compared to 2.88 percent in January. 

February's inflation was still within the target set by Bank Indonesia, the country's central bank, of between 2 and 4 percent his year. 

The central bank had just cut its benchmark interest rate for the first time this year to 4.75 percent in February.

The first cut since October was aimed at reinvigorating growth and countering the effects of the Covid-19 outbreak that has been disrupting global economic activities.  

Finance Minister Sri Mulyani Indrawati had warned earlier that the coronavirus disruption may cause Indonesia's economy to expand by only 4.7 percent in the first quarter of this year, lower than the 4.9 percent reached in the previous quarter. 

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