A banana seller receives payment in bamboo tokens from a woman in Pundensari traditional market in Madiun, East Java last month. (Antara Photo/ Siswowidodo)

Inflation Picks Up in September


OCTOBER 01, 2020

Jakarta. The annual inflation rate in Indonesia has inched up for the first time this year in September driven by an increase in some raw food prices, as consumer demands remain under pressure amid the government's restriction to curb the spread of the Covid-19 pandemic. 

The consumer price index rose 1.42 percent in September from the same month a year ago, accelerating from the 1.32 percent increase a month earlier, which was the lowest inflation rate in the past two decades the Central Statistics Agency (BPS) announced on Thursday. The inflation reading was also slightly higher than the 1.4 percent rate expected by the market. 

Food, beverages and cigarettes registered the biggest price increase last month, rising by 1.78 percent compared to 0.79 percent in August. Housing and services prices increase also accelerated to 0.66 percent in September from 0.64 percent in August. 

Meanwhile, the increase in restaurant prices rose less slowed down further to 2.37 percent from 2.45 percent. Education was also down to 1.34 percent from 1.61 percent. 


Core inflation, which excluded prices of volatile items like raw foods and of goods controlled by the government like fuel and electricity, was at 1.82 percent in August, down from 2.03 percent a month earlier. That was the lowest since 2004, when BPS and Bank Indonesia, the country central bank, began to measure the statistic. 

"The supply was actually enough [to meet demand]. It was the people's purchasing power that is still weakening," BPS head Suhariyanto said on Thursday. 

Jakarta and its neighboring cities in West Java have returned to impose the stricter form of large-scale social restrictions (PSBB) last month, banning people from gathering in public places like shopping malls, parks and places of worship. 

Still, the tick up in September inflation reading should offer little concern to Bank Indonesia which has kept its interest rate at 4 percent in the past two months.

Bank Indonesia had said that the inflation for 2020 and 2021 to remain under control between its target of between 2 and 4 percent. That was due to a combination of weak demand and Bank Indonesia policy to anchor the inflation expectation by keeping the exchange rate stable, the central bank said earlier.