Inflation Likely Within Cbank's 2.5%-4.5% Target This Year

Bank Indonesia projects February inflation to likely be tamer than January's 3.25 percent, indicating only a mild rate of expansion going forward. (Reuters Photo/Nyimas Laula)

By : Adinda Normala | on 12:20 PM February 25, 2018
Category : Business, Economy

[Updated at 4.06 p.m. on Monday, Feb. 26 to recast headline, lead and revise the second paragraph]

Jakarta. Bank Indonesia projects February inflation to likely be tamer than January's 3.25 percent, indicating only a mild rate of expansion going forward.

Bank Indonesia Governor Agus Martowardojo said on Friday (24/02) that inflation in the world's fourth most populous nation was likely to remain within the central bank's 2.5 percent to 4.5 percent target this year.

A mild inflation rate would support the bank's accommodating monetary stance, having kept its benchmark interest rate at a record-low 4.25 percent for six consecutive months.

The biggest contributor to that figure is still volatile food prices, which according to Agus, will probably be the highest in three years. The prices of rice, red chili peppers and garlic have been rising in recent months, reflecting supply-side problems in some regions.

"We noted that there is an increasing trend in 2018 in volatile food inflation, which will probably be higher than the average inflation for the corresponding period over the past three years, especially in Java and Sumatra," Agus told reporters on Friday.

Indonesia recorded volatile food price inflation of 4.84 percent in February 2015, while the figure rose to 7.87 percent in February 2016 before lowering to 4.46 percent in February last year.

Agus expressed hope that lower volatile food price inflation trending in some regions in eastern Indonesia, including Sulawesi and Papua, can help contain overall volatile food price inflation.

The central bank targets this year's volatile food price inflation to be below the 4 percent to 5 percent range.

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