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MACROECONOMICS

Deflation may occur in August: Bank Indonesia

Tuesday, 29 August 2017 | Wahyu Tri Rahmawati

KONTAN.CO.ID - Bank Indonesia says deflation could occur August as a result of lower transportation costs and staple food prices.

A central bank survey showed that inflation stood at 0.01 percent in the third week of August, keeping annual inflation benign at 3.9 percent.

"Deflation may occur because [inflation of] 0.01 percent is very low," Agus said. "But that's according to BI's survey."

The Central Statistics Agency (BPS) is scheduled to announce the inflation figure on Friday.

Although the prices of several commodities, such as chicken and eggs as well as house rental,  rose, overall inflation is under control, he said.

The central bank forecasts this year's inflation to hover at between 3 and 5 percent.

Inflation stands at 3.88 percent year-on-year (yoy) with core inflation tamed at 3.05 percent.

Such a low rate encouraged the central bank to cut its benchmark rate -- the BI seven-day reverse repurchase (repo) rate -- by 25 basis points (bps) to 4.5 percent earlier this month after holding it unchanged for nine consecutive months.

"Our monetary stance is neutral," Agus answered when asked about the possibility of further easing, "We lowered the rate recently because data showed we could benefit from [cutting the rate]."

Reporter: Wahyu Tri Rahmawati
Editor: Wahyu Rahmawati
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