Indonesia's Inflation Under Control Amid Global Economic Uncertainty

Jakarta, INTI – Indonesia has successfully maintained controlled inflation, with the May 2024 inflation rate recorded at 2.84% year-on-year (yoy), well within the target range of 2.5±1%. This achievement surpasses many G20 countries, such as Argentina (289% yoy), Turkey (75.45% yoy), and Russia (7.84% yoy).

This success results from consistent monetary policies and strong cooperation between Bank Indonesia and the government through the Central Inflation Control Team (TPIP) and Regional Inflation Control Teams (TPID). The implementation of the National Movement for Food Inflation Control (GNPIP) across various regions has been pivotal.

During the 2024 National Coordination Meeting on Inflation Control held at the State Palace on Friday (14/06), President Joko Widodo instructed TPIP and TPID to enhance inflation control efforts by securing production and improving food supply chain efficiency, supported by GNPIP.

President Joko Widodo outlined five strategic directives to boost food production and supply chain efficiency. First, strengthening food production by optimizing irrigation infrastructure to mitigate climate change impacts. Second, accelerating the adoption of research-based technology to support digital agriculture (smart agriculture). Third, encouraging investment to enhance the value of agricultural products. Fourth, modernizing integrated logistics systems and infrastructure to support smooth distribution and supply chain efficiency across regions. Fifth, reinforcing synergy and coordination among institutions at the central and regional levels to support inflation control efforts.

The directives aim to ensure controlled inflation, laying a solid foundation for achieving the inflation target of 2.5±1% for 2025-2027 amidst global economic uncertainties and structural challenges.

“According to the policy strategy from price affordability, supply availability, smooth distribution, and effective communication. This is mainly a mix of fiscal, monetary, and real sector policies to keep inflation under control,” said Coordinating Minister for Economic Affairs Airlangga Hartarto, who also serves as TPIP Chairman.

Minister Airlangga elaborated on the 4K policy strategy (Price Affordability, Supply Availability, Smooth Distribution, and Effective Communication). First, price stabilization to address short-term price increases through the distribution of SPHP, food assistance, and cheap food movements nationwide has successfully curbed higher food prices. Second, boosting domestic production through programs like irrigation, increasing subsidized fertilizer allocation, and providing financing access for the agricultural sector.

Third, ensuring smooth food distribution across Indonesia through programs facilitated by the National Food Agency for 10 strategic food commodities and optimizing the use of sea toll roads, especially for remote, outermost, and border regions. Fourth, central fiscal support and synergy between ministries/agencies also need to be optimized.

Furthermore, Minister Airlangga highlighted the importance of maintaining domestic supply continuity as the key to price stability across regions and providing accountable food data. Currently, real-time and accurate price data are available, but food supply data is still under development.

“Developing the food balance is crucial. The National Food Agency will prepare accountable food data. With a food balance, regional price stabilization can be better monitored,” said Minister Airlangga.

In recognition of TPID’s efforts in regional inflation control, the TPID Awards 2024 winners were announced during the meeting. The awards were categorized into Best Performance TPID for Provinces and Regencies/Cities and Outstanding TPID for Regencies/Cities.

The TPID Award 2024 winners are as follows:

• Sumatra Region: Province: Riau Islands, Best Regency/City: Pekanbaru City, Outstanding Regency/City: Tanah Datar Regency.
• Java-Bali Region: Province: Central Java, Best Regency/City: Madiun City, Outstanding Regency/City: Kebumen Regency.
• Kalimantan Region: Province: South Kalimantan, Best Regency/City: Banjarmasin City, Outstanding Regency/City: Kutai Kartanegara Regency.
• Sulawesi Region: Province: Southeast Sulawesi, Best Regency/City: Bone Regency, Outstanding Regency/City: Boalemo Regency.
• Nusa Tenggara, Maluku, and Papua Region: Province: West Nusa Tenggara, Best Regency/City: Mataram City, Outstanding Regency/City: West Lombok Regency.

The National Coordination Meeting was attended by the Governor of Bank Indonesia, Minister of Home Affairs, Deputy Minister of Finance, several ministers from the Indonesia Onward Cabinet, leaders of state institutions, all TPID provinces/regencies/cities, and related associations.