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Indonesia records 2.68 percent January inflation using new formula

Indonesia records 2.68 percent January inflation using new formula

Indonesia recorded annual inflation of 2.68 percent in January in applying a new formula for calculating its consumer price index (CPI), Statistics Indonesia (BPS) announced on Monday.

The new formula uses 2018 as the base year of the CPI instead of 2012, as well as a new consumption pattern.

January’s inflation figure, therefore, cannot be compared with the December inflation rate of 2.72 percent that was calculated using the old formula, since it was not “an apple-to-apple comparison”, said BPS head Suhariyanto.

“We included prices in the ride-hailing sector, for instance, but excluded items that were no longer [relevant],” he said at a press conference on Monday in Jakarta.

The different components used in the calculation, however, did not significantly affect this year’s inflation rate compared to previous years, he added.

Indonesia’s monthly inflation was 0.32 percent in January 2019. The CPI was calculated at 0.39 percent in January 2020, with core inflation of 2.88 percent.

“The main cause of the inflation in January 2020 was the increased price of chilies, fish and tobacco, despite the decrease in the price of flight tickets and fuel,” said Suhariyanto. He added that the government’s decision to lower the price of fuel and flight tickets had contributed to deflation in January.

Of the 90 cities the BPS surveyed, 79 recorded inflation, while the remaining 11 cities recorded deflation. Meulaboh, West Aceh, recorded the highest inflation with 1.44 percent, while Baubau, Southeast Sulawesi, recorded the highest deflation with 1.39 percent.

Indonesia recorded an annual inflation of 2.72 percent in 2019, the lowest level in about two decades thanks to lower inflationary pressures from government-regulated prices.

Bank Indonesia has targeted inflation of between 2 percent and 4 percent for this year.