Inflation slows in February as cooking oil price drops – Economy

Dzulfiqar Fathur Rahman (The Jakarta Post)

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Jakarta ●
Tue 1 March 2022

Indonesia recorded a slowdown in inflation in February at the end of the peak consumption season as the government tightened mobility restrictions amid rising COVID-19 cases.

The consumer price index (CPI) rose 2.06 percent year-on-year (yr) in February, Statistics Indonesia (BPS) reported. This annual inflation rate was slightly lower than that observed in January at 2.18%.

“If we look at the contribution to inflation of 2.06%, it was [driven by] cooking oil, which was still showing inflation on a yearly basis,” Setianto, BPS undersecretary for distribution services and statistics, said in an online press briefing on Tuesday.

While inflation tends to ease after the peak spending season at the end of the year, February’s inflation slowdown came as the government tightened mobility restrictions to limit COVID-19 cases. 19 caused by the Omicron variant, which peaked in mid-February.

Read also: The soy debacle

The CPI posted a deflation of 0.02% in February from the previous month, BPS reported. The last monthly deflation was recorded in September 2021, when the country was reeling from the Delta wave.

Falling food, beverage and tobacco prices were the main contributor to February’s deflation. The main commodities causing deflation were cooking oil, chicken eggs, chicken meat, cayenne pepper and fresh fish.

The drop in cooking oil prices followed the government’s decision to set the ceiling price at Rp 11,500 (80 US cents) per liter for bulk cooking oil, Rp 13,500 per liter for oil of cooking with simple packaging and Rp 14,000 per liter for premium packaging.

The price of cooking oil with plain packaging, for example, fell by 10.5% to Rs 16,200 per liter from February 25 to January 27, according to data from the Ministry of Commerce. However, it was still 20% above the cap.

Price increases for personal care and other services contributed 0.04 percentage point to the monthly change in the CPI, thus slightly offsetting deflation in food prices. The main commodity driving the price rise was gold, as the metal has become increasingly attractive following the recent Russian invasion of Ukraine.

Core CPI rose 2.03% in February from a year earlier, suggesting a further pickup in consumer demand. Annual government administered price inflation was 2.34% and price volatility was 1.81%.

Headline inflation and core inflation exceeded forecasts of 1.97 and 1.91 percent, respectively, by economists at state-owned bank Mandiri.

“We believe that demand-side inflationary pressure or demand-pull inflation will continue amid improving demand alongside the domestic economic recovery,” Faisal Rachman, an economist at the bank, said in a statement. an analysis published on Tuesday.

“Public mobility should continue to increase despite temporary pressure from the Omicron variant.”

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Richard L. Militello