The Indonesian government said, the country is preparing to face a spike in inflation in the coming months, caused by high global commodity prices, which may lead to a slowdown in the post-pandemic economic recovery.
Finance Minister, Sri Mulyani Indrawati, said at the ASEAN (the Association of Southeast Asian Nations) Finance Ministers and Central Bank Governors Meeting (AFMGM), the surge in the global commodity prices was believed to happen as the spillover effect of the Ukraine crisis.
“This is a serious challenge for all policy makers, maybe not only in Indonesia, but all ASEAN countries,” the minister said.
Indonesia’s Consumer Price Index in Mar, rose by 2.64 percent year-on-year, the highest increase since Apr, 2020, according to the country’s Statistics Indonesia (BPS).
The Indonesian people have seen a surge in cooking oil prices up to six percent in the domestic market, since the government removed the price cap on cooking oil in Feb, following an increase in international crude palm oil (CPO) prices.
Indonesia, the world’s largest palm oil producer, experienced the impact of the high prices of global CPO last month, amid the supply bottleneck of sunflower oil, due to the Ukraine crisis, BPS head, Margo Yuwono, said.
Indonesia’s state-owned oil and gas company, Pertamina, also raised the price of its high-octane gasoline product, named Pertamax, by 40 percent starting Friday.
Indonesia’s Coordinating Minister for Maritime and Investment Affairs, Luhut Binsar Pandjaitan, said, the government might soon raise the price of the three-kilogram liquefied petroleum gas (LPG) canisters, the most popular brand used by the people in the country.
Economic and energy observer, Fahmy Radhi from Gadjah Mada University, warned the government that, the plan to raise the LPG price could create panic buying from the public.
President Joko Widodo told his ministers to monitor the soaring domestic prices and to convey the policy changes more clearly to the public, including any plans related to raising prices of other commodities.
Deputy Governor of Bank Indonesia, Dody Budi Waluyo, was confident that until the end of the year, inflation will remain between two and four percent.
Economic expert, Yusuf Rendy, from the Jakarta-based think tank Centre of Reform on Economics (Core), said that, higher prices and inflation would burden the middle-lower class of people and weaken their purchasing power.
“For the middle-upper class, inflation may not bring significant impact, but the middle-lower class would suffer, given their economic situations haven’t yet fully recovered,” Rendy noted.
He suggested that the government distribute more aid to the people and take more subsidy policies, to support the purchasing power of the middle-lower class.
Source: NAM News Network