KONTAN.CO.ID - President Joko Widodo (Jokowi) said the country's inflation is expected to remain under control despite factors that need addressing such as the impact of weather anomaly on food commodities.
"Inflation rate is expected to remain under control at around 3.5 percent per year on improvement in the national production capacity, price stability and relatively low prices of global commodities," Jokowi said when presenting the draft law on 2018 state budget and financial note at a plenary session of the Parliament here on Wednesday.
The president, however, warned against potential damage that could be inflicted by unfavorable weather.
The country has been hit by weather phenomenon El Nino and La Nina over the past three years causing lengthy drought followed by heavy rains that trigger flooding and landslides.
"Therefore, effective coordination in monetary, fiscal and real sector policies needs to be strengthened to ensure price stability in the country," the president said.
Lower inflation last month gave greater optimism that the economy would remain stable in longer term allowing the economy to regain more strength.
"The sentiment on the Indonesian economy is bullish as the stability is improving," researcher and analyst from forex broker FXTM Lukman Otunuga said.
Head of the Central Bureau of Statistics (BPS) Suhariyanto said inflation under control until mid 2017 could keep the purchasing power of the people and drive up household consumption.
"If inflation is under control, the people's purchasing power would improve,"Suhariyanto said earlier this month.
He said stable prices of goods and services could increase spending by the people Coordinating Minister for Economy Darmin Nasution said he was optimistic that the country's inflation would average below 4 percent this year despite a slight surge in the first months of the year.
Editor: Yudho Winarto