Inflation expected to hit 3.5–4.5 percent this year, finance ministry says

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The 2022 inflation rate is expected to reach 3.5-4.5%, which is higher than the first projection of the state budget. The rise (in the world price of commodities) will have the potential to drive up domestic commodity prices.

Jakarta (ANTARA) – The Ministry of Finance has forecast Indonesia’s inflation rate to be between 3.5 and 4.5 percent year-on-year this year, well above the 3 percent target set in the 2022 state budget.

The higher-than-expected inflation rate will be triggered by soaring global commodity prices, especially energy and food, said the head of the Ministry of Finance’s Fiscal Policy Council, Febrio Kacaribu. , during an online press conference on the state budget on Wednesday.

“The inflation rate in 2022 is expected to reach 3.5-4.5%, which is higher than the first projection of the state budget. The rise (in the global commodity price) will have the potential to drive up domestic commodity prices,” he said.

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The government will remain attentive to the latest price developments and will stabilize food prices so that they do not have a direct impact on consumers, he added.

Amid global uncertainty, the government will use the state budget as an instrument to protect people’s purchasing power and maintain the momentum of national economic recovery, he said.

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“The state budget serves as a shock absorber. We want to maintain the purchasing power of the population as well as the momentum of the economic recovery. In this context, (the effort) to maintain the purchasing power of population results in a relatively contained inflation rate compared to other countries,” he added.

Earlier, Statistics Indonesia (BPS) said inflation hit 0.61% in June 2022, bringing the calendar year inflation to 3.19%.

June 2022 inflation was recorded at 4.35% year on year, compared to 3.55% a month earlier. It is also the highest inflation recorded since June 2017.

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