Jakarta, INTI - Despite ongoing global economic challenges, Indonesia is showing impressive signs of stability. In September 2024, the country managed to control inflation at 1.84% (yoy), lower than the previous month. Month-to-month deflation also occurred, mainly driven by declining food and fuel prices.
The volatile food (VF) component experienced deflation of 1.34% (mtm), largely due to the ongoing harvest season in key production regions, which kept prices of food commodities like red chili, cayenne pepper, broiler eggs, broiler chicken, and tomatoes stable. This was reinforced by government policies, including low-cost market operations, food distribution, and inter-regional cooperation.
Moreover, administered prices, which are regulated by the government, experienced deflation of 0.04% (mtm), primarily due to the reduction in non-subsidized fuel prices by Pertamina in September 2024. However, commodities like Machine-Rolled Clove Cigarettes (SKM) and air transportation still exerted inflationary pressure on this component.
Indonesia also received international recognition as Rating and Investment Information, Inc. (R&I) affirmed the country’s Sovereign Credit Rating at BBB+ with a positive outlook. This reflects global confidence in Indonesia’s economic prospects, which are projected to grow between 5.0% and 5.2% in 2024.
Nevertheless, the global economic slowdown remains a challenge. Indonesia’s Purchasing Managers' Index (PMI) remained in contraction territory at 49.2 in September 2024, though it improved slightly from 48.9 in August 2024. The government continues to address these challenges through policies such as natural resource downstreaming, import substitution, and domestic industry development as part of the Making Indonesia 4.0 program.
The government is also ensuring that people’s purchasing power remains strong, as seen in the core inflation rate increase of 0.16% (mtm) or 2.09% (yoy). This rise was mainly driven by the increase in ground coffee prices, following the global coffee price trend, and the higher costs of tertiary education at the start of the academic year. Although core inflation has risen, Bank Mandiri's latest report on consumer spending indicates that consumer purchasing power remains robust, supporting economic growth momentum.
With strong policy coordination, Indonesia is expected to continue its resilience amidst global uncertainty. The government is committed to ensuring price stability, driving growth in vital sectors like agriculture and manufacturing, and maintaining the purchasing power of its citizens to sustain positive economic growth.