Inflation May Accelerate to 4.38% in January
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Supplies of shallots and chili, staple ingredients in Indonesian meals, are often low during the rainy season, propping up the prices index, said Sasmito Hadi Wibowo, the deputy of goods and services distribution at the Central Statistics Agency (BPS).
Beef prices are also on the rise, increasing by 1 percent alone this month after the government slapped a 10 percent value added tax on beef trade and import in the beginning of this year. Officials reversed the policy on Friday.
Bank Indonesia has targeted an inflation rate of between 3 percent and 5 percent this year.
The central bank just cut its benchmark interest rate to 7.25 percent last week as it seeks to stimulate bank lending and boost growth, but an accelerating inflation would undermine its ability to trim the interest rate further.
The government aims to expand Southeast Asia’s largest economy by 5.3 percent this year, rebounding from an estimated 4.7 percent last year, its slowest pace since 2009.
Questions & Answers
Q.Which specific staple ingredients are facing low supply during the rainy season, potentially increasing prices?
Which specific staple ingredients are facing low supply during the rainy season, potentially increasing prices?
Shallots and chili, which are staple ingredients in Indonesian meals, often experience low supply during the rainy season. This factor contributes to propping up the prices index, according to the Central Statistics Agency.
Q.What caused the recent 1 percent increase in beef prices this month?
What caused the recent 1 percent increase in beef prices this month?
Beef prices rose by 1 percent this month after the government introduced a 10 percent value added tax on beef trade and import. However, officials reversed this policy on Friday.
Q.What is Bank Indonesia's target range for the inflation rate this year?
What is Bank Indonesia's target range for the inflation rate this year?
Bank Indonesia has set an inflation rate target of between 3 percent and 5 percent for the current year. An accelerating inflation would undermine its ability to trim the interest rate further.
Q.What is the government's economic growth target for Southeast Asia’s largest economy this year?
What is the government's economic growth target for Southeast Asia’s largest economy this year?
The government aims to expand Southeast Asia’s largest economy by 5.3 percent this year. This represents a rebound from an estimated 4.7 percent growth last year, which was its slowest pace since 2009.
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