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MACROECONOMICS

February inflation tamed at 0.23%

Wednesday, 01 March 2017 | Barratut Taqiyyah Rafie

JAKARTA. Monthly inflation in February stood at 0.23 percent month-on-month, bringing annual inflation to 3.41 percent, the Central Statistics Agency (BPS) reported on Wednesday. It was lower than the 0.97 percent seen a month earlier.

February inflation was mainly caused by administered prices, such as the 900 volt-ampere (VA) electricity rates, as well as volatile foods including green chilies, shallots and cooking oil. Meanwhile, deflation occurred in several food commodities such as red chilies, chicken meat, eggs and air transportation costs.

"The inflation in food was very manageable because rice prices declined, except in some food commodities that easily decay because of weather [high rainfall], such as green chilies and shallots," BPS head Suhariyanto said in a press conference on Wednesday.

The electricity price hike was triggered by the government's subsidy cut for 900 volt-ampere (VA) customers as part of fiscal adjustment. However, the effect on overall inflation was limited as the hike only hit electricity customers who use the post-paid system.

The BPS has predicted that there would be further inflationary pressures in March and May, when the government increases the electricity prices for the second and third phases.

"Based on our experience in January and February, there will certainly be effects in March and May [when electricity prices will be increased again]. However, I think the government has prepared for this," Suhariyanto said. (Grace D. Amianti)

Source : The Jakarta Post

Reporter: Barratut Taqiyyah Rafie
Editor: Barratut Taqiyyah