Indonesia's annual inflation rate slowed to 3 percent in November, thanks to declining costs of raw foods and air transportation. (Antara Photo/Muhammad Iqbal)

Inflation Slows to 3% in November Thanks to Cheaper Airfares


DECEMBER 02, 2019

Jakarta. Indonesia's annual inflation rate slowed to 3 percent in November, thanks to declining costs of raw foods and air transportation, the Central Statistics Agency, or BPS, announced on Monday. 

This was the lowest rate since May, down significantly from October's 3.13 percent. Tame inflation provided plenty of room for Bank Indonesia – the central bank – to continue a dovish monetary policy needed to boost economic growth.

BPS head Suhariyanto said the decline in the price of raw foods and airfares had helped to tame inflation.

"Commodities whose costs have been declining include red chili, fresh fish, cayenne pepper, green chili and air freight," Suhariyanto told reporters. 

Core inflation, which excludes volatile raw food prices and administered prices like electricity, subsidized fuel and airfare, also declined to 3.08 percent last month from 3.2 percent in October.

Suhariyanto warned that prices may spike in December due to higher demand for goods and services during the Christmas and New Year holidays. 

"But I'm sure this year's inflation target [of 3.5 percent] will be achieved," he said. The target is set by Bank Indonesia and the government.

The central bank refrained from cutting its benchmark interest rate last month having already cut the rate by one full percentage point – from 6 percent to 5 percent – in July-October to prop up growth.

The largest economy in Southeast Asia has expanded by 5.02 percent by the third quarter since the same period a year earlier. It slowed from 5.05 percent in the second quarter.

The Finance Ministry had projected an economic expansion of 5.05 percent this year.