Indonesia’s inflation stays within range

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By Stefanno Sulaiman and Gayatri Suroyo

JAKARTA- Indonesia’s annual inflation rate was 2.12 percent in August, essentially unchanged from 2.13 percent in July, official data showed on Monday, holding comfortably within the central bank’s target range and matching market expectations.

The August headline inflation rate was the lowest since February 2022, and matched the forecast in a Reuters poll. Bank Indonesia (BI) has a target range of 1.5 percent to 3.5 percent for inflation.

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The annual core inflation rate edged up to 2.02 percent last month from 1.95 percent in July, the data showed, slightly above the 1.98 percent forecast in the poll.

Inflation in Southeast Asia’s biggest economy has held within the central bank’s target range since the middle of last year, but BI has kept interest rates relatively high to focus on anchoring the rupiah currency and weathering global market volatility.

Governor Perry Warjiyo has said currency stability was the policy focus for this quarter, but he saw a room for a monetary policy easing to boost economic growth in the next quarter.

Indonesian President Joko Widodo highlighted his economic, infrastructure and development successes in his final state of nation address last month, delivered months before he steps down after a decade as head of Southeast Asia’s biggest economy.

Jokowi, as the president is popularly known, called attention to his success building roads, bridges and ports across the world’s largest archipelago.

“We have been able to build a new foundation and civilization… building from the peripheries, building from villages, and building from outermost areas,” he told the nation’s parliament.

To date, his government has built 2,700 kilometers of new toll roads, 50 new ports and airports, and 1.1 million hectares of irrigation canals, he said.

The outgoing president, a former successful furniture businessman from Java, also highlighted Indonesia’s economic record, pointing to a consistent growth rate of 5 percent, despite global economic headwinds.

Home to more than 270 million people, Jokowi said the lowering of extreme poverty from 6.1 percent to under 1 percent, the introduction of the national healthcare system, and the criminal code overhaul were notable successes.

The Indonesian president leaves office with a strong economic record, but is facing mounting criticism about other aspects of his legacy, including the weakening of the judiciary and anti-corruption body and attempts to nurture his own political dynasty.

Last October, the Constitutional Court, then headed by Jokowi’s brother-in-law, amended the age requirement of candidates, paving the way for Jokowi’s eldest son Gibran Rakabuming Raka, 36, to contest and win the vice presidency.

Gibran, alongside president-elect Prabowo Subianto, will be inaugurated on Oct. 20.
Prabowo, an ex-commander once banned from entering the US on account of his alleged human rights record, won the February elections with the help of Jokowi’s influential backing.

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