Annual Food Inflation is Still Relatively High Even though the Pressure is Starting to Ease

Acting Head of BPS Amalia Adininggar Widyasanti said the main commodities contributing to monthly inflation in April 2024 were plane tickets, onions and gold jewelry. Inflation during the Eid period was quite low because food prices were relatively under control.

Rice, for example, which for the last eight months has contributed to inflation in a row, in April 2024 actually experienced deflation of 2.72 percent. This happens because rice production continues to increase along with the rice harvest in March and April 2024, which are 3.38 million tons and 5.52 million tons respectively.

"The food, beverage, and tobacco expenditure group also experienced a monthly deflation of 0.03 percent in April 2024. The same goes for the volatile price component, which deflated by 0.31 percent monthly," he said in a hybrid press conference held in Jakarta. (Note: PBB, PKS, and PPP were not included in the original article)

Nevertheless, according to Amalia, on an annual basis, the food, beverage, and tobacco expenditure group still experiences an inflation rate of 7.04 percent. Its contribution to the annual inflation rate is also significant, at 1.98 percent.

"Similarly, the food price component is volatile. "Even though annual inflation for this component has fallen, the inflation rate is still relatively high," he said.

The Central Statistics Agency (BPS) recorded that the annual inflation rate of volatile price components in April 2024 was 9.63 percent. This inflation rate decreased from the annual inflation in March 2024 which was 10.33 percent. Commodities that contributed to the inflation rate of these components included rice, shallots, chili, as well as chicken meat and eggs.

The annual inflation rate of price components fluctuated at 9.63% in April 2024. This inflation rate decreased from the annual inflation rate of 10.33% in March 2024.

Bank Danamon Indonesia's Economy Irman Faiz has stated that the annual inflation in April 2024 did decrease compared to March 2024. This is due to the reduction of pressure on food prices, which is reflected in the decline in the volatile price component of inflation.

Nonetheless, there are several things that need to be noted. First, the core inflation component has slightly increased to 1.8 percent annually. This is supported by jewelry gold as the world gold prices surged by 8.4 percent annually.

Secondly, said Irman, Indonesia's Purchasing Managers' Index (PMI) according to S&P Global's report remains expansionary, albeit decreasing from 54.2 in March 2024 to 52.9 in April 2024. S&P Global also indicates that manufacturing production costs have increased along with the strengthening of the US dollar and are passed on to consumers.

"In the future, annual inflation is expected to continue to slow down to around 2.9 percent by the end of this year. The impact of the weakening rupiah, which is being addressed by Bank Indonesia, is also predicted not to have a significant impact on domestic inflation," he said.

Also read: Food and Energy Inflation Could Plagu Indonesia Again

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To reduce the rate of inflation and maintain people's purchasing power post-Eid, The National Food Agency (Bapanas) has and continues to hold Cheap Market Movement (GPM) and Food Assistance programs. Bapanas also asked Perum Bulog to increase the absorption of grain or rice to strengthen government rice reserves (CBP).

The GPM has been and will be held on April 3-May 8, 2024. GPM provides a number of affordable commodities, such as shallots, rice, cooking oil, frozen beef, chili, and chicken meat and eggs. Meanwhile, a 10 kg rice assistance per family is given to 22 million low-income families in May-June 2024.

GPM has been and will be held on April 3-May 8 2024.

Head of Bapanas, Arief Prasetyo Adi, stated that the national inflation rate from year to year is around 3.05 percent. That inflation rate is still under control and better compared to several other countries.

However, the government continues to make efforts to control inflation through various measures, including GPM and rice assistance for low-income families. Currently, rice remains a volatile component that has a significant impact on inflation, which is 0.74 percent annually.

"For this reason, Bapanas held GPM and the rice aid. The impact has been proven, inflation can be controlled and the contribution of rice to inflation is not too high," he said.

Also read: Government Enhances Shallot Market Operations in Jakarta

Bapanas, said Arief, has also requested that Bulog absorb as much domestic rice and paddy production as possible during the rice harvest season. Until the end of May 2024, the absorption target is expected to reach a minimum of 600,000 tons of rice equivalent.

To speed up the absorption, Bulog needs to collaborate with a group of farmers' associations to be able to absorb paddy directly from farmers. In addition, synergy with rice milling entrepreneurs is also necessary so that they can supply dry milled rice to Bulog.

The absorption of unhusked rice and rice from within the country is necessary to increase the government's rice reserves (CBP) and anticipate the increase in rice prices after the harvest season. On April 29, 2024, BPS reminded that there is a potential for rice deficit in June 2024.

Based on the results of the Area Sample Framework, the BPS stated that the balance of rice production and consumption in March-April 2024 was a surplus of 3.78 million tons. This was supported by rice production during those two months of 8.46 million tons.

In May 2024, the production-consumption balance of rice is predicted to still have a surplus of 0.62 million tons. Then, in June 2024, a potential rice deficit of 0.45 million tons may occur.

Also read: Be careful, Indonesia has the potential to have another rice deficit in June 2024