1-2-2024 (JAKARTA) Indonesia’s economy witnessed a decline in inflation, with the rate dropping to 2.61 percent in 2023, according to a recent report by Statistics Indonesia (BPS). This figure represents a notable decrease compared to the previous month’s inflation rate of 2.86 percent. The announcement, made on Tuesday, reinforces Indonesia’s commitment to maintaining a steady and controlled inflation rate.
The drop in inflation aligns with the target set by the central bank, Bank Indonesia, which aimed to achieve an inflation rate between 2 and 4 percent for 2023. This positive outcome can be attributed to various factors, including the increase in prices of food, drinks, and cigarettes. Amalia Widyasanti, the acting head of BPS, highlighted that the government had implemented an average tariff increase of 10 percent since January 2023, contributing to the stability of prices.
Throughout the year, Bank Indonesia took proactive measures to ensure the stability of the rupiah currency and maintain control over inflation. The benchmark banking interest rate was raised twice, reaching a current rate of 6.00 percent. These actions were part of a broader strategy aimed at safeguarding the economy and preventing any adverse effects caused by inflation.
Furthermore, the international market witnessed a downward trend in crude oil prices during 2023, prompting adjustments to non-subsidized fuel prices by the national oil company, Pertamina. These adjustments played a role in curbing inflation and providing relief to Indonesian consumers.
However, challenges remain on the horizon. Since March 2023, Indonesia has faced the impact of El Nino, resulting in crop failure, a rise in rice prices, and an increase in rice imports. These effects are expected to persist until at least April 2024, posing additional hurdles for the country’s inflation management.
Looking ahead, the central bank has set a new target range for inflation in 2024, aiming for a rate between 1.5 and 3.5 percent. This renewed focus reflects Indonesia’s determination to maintain a healthy and sustainable economic environment
