Low In­fla­tion, Pos­si­ble De­fla­tion Ex­pected in Au­gust

Indonesia Expat - - Business Profile -

Econ­o­mists and pol­i­cy­mak­ers are ex­pect­ing in­fla­tion in Au­gust will have been low, or even neg­a­tive, de­spite the Idul Adha hol­i­day which of­ten drives in­fla­tion.

In­sti­tute for De­vel­op­ment of Eco­nom­ics and Fi­nance Econ­o­mist Bhima Yud­hi­s­tira Adine­gara agreed, telling Tempo the fig­ure is likely to be very low.

"We pre­dicted that there was a po­ten­tial for de­fla­tion on Au­gust. How­ever, we es­ti­mated that there will be a low in­fla­tion rate of 0.04 per­cent," he said on Satur­day, September 1.

Ear­lier in Au­gust Bank In­done­sia Gov­er­nor Agus Mar­to­war­dojo said In­done­sia would likely record an in­fla­tion rate of around 0.02 per­cent, ac­cord­ing to data from the cen­tral bank’s price mon­i­tor­ing sur­vey (SPH). Mar­to­war­dojo said at that rate the 2017 full-year in­fla­tion rate can be ex­pected to hit 3.91 per­cent, be­low the tar­get of 4 per­cent as set out in the re­vised 2017 state bud­get.

He added the low in­fla­tion was pos­si­bly caused by lim­ited de­mand and a sta­ble ru­piah.

“Go­ing for­ward, in­fla­tion is pre­dicted to re­main low around the de­ter­mined in­fla­tion tar­get,” he said, as re­ported by Tempo.

The pre­dic­tions are a sur­prise, with the Idul Adha hol­i­day typ­i­cally in­creas­ing in­fla­tion each year with hol­i­day­mak­ers stock­ing up on food and other goods for the long week­end. But, this year saw a sta­bi­liza­tion in food prices, lead­ing to the low in­fla­tion rate.

Adine­gara sug­gested ed­u­ca­tional ex­penses are to blame for typ­i­cal Au­gust in­fla­tion. Although the new school year be­gins in July, he told Tempo, ex­penses con­tinue through­out the fol­low­ing month too.

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