Chairul Tanjung Expects Deflation in May 2014 due to Stable Food Prices
Indonesian newly installed Coordinating Minister for Economic Affairs Chairul Tanjung expects deflation in May 2014 due to stable prices of the main agricultural and food commodities. After Tanjung was appointed to replace Hatta Rajasa, who resigned from his post to focus on his vice-presidential bid in the July presidential election, Tanjung announced that he will prioritize policies that foster stable food prices as well as fiscal stability. In April 2014, Indonesia recorded deflation of 0.02 percent (month-to-month).
Deflation in April of 0.02 percent was mainly supported by a sharp decline of prices in the volatile foods group. These declining food prices were the result of abundant crops supply due to the peak of the harvest season. Traditionally, the months of April and May bring deflation or low inflation to Southeast Asia's largest economy due to the harvest season.
Ten days prior to the start of the holy fasting month of Ramadan (June), the government will conduct market operations in order to anticipate higher food prices. Usually, inflationary pressures rise during Ramadan as people buy more food products as well as clothing, shoes, and other consumer products. Commodities that are closely monitored during the market operations include beef, chili, garlic, onions, chicken meat, cooking oil and rice.
In order to safeguard fiscal stability, Tanjung focuses on slashing government budgets that are not aimed at strengthening the economy or the welfare of the people. These include the budget for government officials' vehicles and the budget for building construction.
Inflation in Indonesia:
|Month|| Monthly Growth
| Monthly Growth
(annual percent change)
Source: Statistics Indonesia