Inflation in Indonesia Slowly Rising Ahead of Ramadan Month
One month ahead of the holy fasting month of Ramadan, food prices in Indonesia have already began to rise. It is a traditional phenomenon that ahead of the Ramadan (and during this month as well as the subsequent Idul Fitri celebrations) inflation peaks as Indonesians spend more money on food products (for dinner parties in the evening after the daily fasting has ended) and other consumer products such as clothes and shoes. However, some concerns have arisen as a presidential regulation on price controls is yet to come out.
This presidential regulation, which is still to be issued, gives authority to the country’s Trade Ministry to control prices of certain commodities. Currently, some inflationary pressures have already been detected. In local markets prices of the nine main staple foods (which include rice, cooking oil, eggs, sugar and meat) have risen in the range of IDR 500-1,000 (roughly USD $0.04 to 0.08). It is important to curb inflation as minor inflationary pressures can already jeopardize the country’s poverty rate. Particularly prices of rice should be controlled as the poorer segments of Indonesian society spend over half of their total disposable income on food items, primarily rice.
Rofi Munawar, member of Commission IV within the House of Representatives (DPR), urges the government to issue the presidential regulation as soon as possible to prevent higher inflationary pressures as the Ramadan month approaches. If not, inflation may peak higher due to psychological reasons.
In April, Indonesian inflation rose 0.36 percent (m/m), or 6.79 percent (y/y) due to higher transportation costs following a fuel price hike in late March. Bank Indonesia expects that full-year inflation will be in the range of 4.0 to 5.0 percent (y/y).
Inflation in Indonesia:
| Month | Monthly Growth 2013 |
Monthly Growth 2014 |
Monthly Growth 2015 |
| January | 1.03% | 1.07% | -0.24% |
| February | 0.75% | 0.26% | -0.36% |
| March | 0.63% | 0.08% | 0.17% |
| April | -0.10% | -0.02% | 0.36% |
| May | -0.03% | 0.16% | |
| June | 1.03% | 0.43% | |
| July | 3.29% | 0.93% | |
| August | 1.12% | 0.47% | |
| September | -0.35% | 0.27% | |
| October | 0.09% | 0.47% | |
| November | 0.12% | 1.50% | |
| December | 0.55% | 2.46% | |
| Total | 8.38% | 8.36% | -0.08% |
Source: Statistics Indonesia (BPS)
Inflation in Indonesia 2008-2014:
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | |
| Inflation (annual percent change) |
9.8 | 4.8 | 5.1 | 5.4 | 4.3 | 8.4 | 8.4 |
Source: World Bank