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Indonesian Inflation at 7-Year High After Fuel Price Rise

Indonesia’s inflation rate shot up to 5.95% in September, its highest since 2015, after a fuel price rise – and officials say it could go higher as some regions are yet to hike fares.


Inflation rose by nearly 6% in Indonesia in September, government officials said.
People wear masks while shopping in Tanah Abang textile market in Jakarta, May 3, 2021. File photo: Ajeng Dinar Ulfiana, Reuters.

 

Indonesia’s inflation rate shot up to 5.95% in September, its highest since October 2015, statistics bureau data showed on Monday.

The rise stemmed from higher transportation costs because of a fuel price rise – and officials warned that the figure could go higher as some regions are yet to hike transport fares.

The headline annual inflation rate rose 1.34% from 4.69% in August, but came in slightly lower than a 6% rate expected in a Reuters poll.

The annual core inflation rate, which excludes government-controlled prices and volatile food prices, picked up pace in September to 3.2%, compared with just over 3% in August and 3.6% forecast by analysts.

September’s inflation was mostly affected by the rise in fuel prices and inflation in transportation sector,” Margo Yuwono, head of Statistics Indonesia told reporters.

He warned that inflation could heat up further in October as a number of regions have not yet increased their transportation fares.

Indonesia raised subsidised fuel prices by about 30% in early September as the government moved to rein in ballooning subsidy bills.

Bank Indonesia (BI) hiked its policy interest rates by 50 basis points in its meeting in September in an effort to control inflation, which it expects will peak at slightly above 6% and core inflation at 4.6% by the year-end, compared to its target range of 2% to 4%.

Bank Danamon economist Irman Faiz said his bank has revised up its inflation outlook for end-2022 to 6.5% from previously 4.5%.

“On the policy front, we expect BI still has 100 bps of space to hike policy rate from the current level this year, as monetary policymakers have vowed to tame inflation down to their target range by 2H23,” he said.

 

Tourist Arrivals Up

Meanwhile, Indonesia recorded its largest number of foreign visitors in August since the start of the pandemic, official data showed on Monday, reflecting a loosening of restrictions and increased travel appetite.

There were about 510,200 arrivals in August, up from 1,800 in the same month a year ago, as public activity kept improving, Margo Yuwono, head of Statistics Indonesia, told reporters.

That was slightly more than the previous month’s figure. For the January-Aug period, Indonesia recorded 1.73 million visitors compared with 81,292 in the same period of 2021, when broad travel curbs were in place.

However, the figures were still significantly less than the same periods of pre-pandemic 2018 and 2019, when Indonesia had about 8 million foreign visitors.

 

A jersey lies among petals on a monument outside a stadium in East Java after a riot and stampede following a soccer match in Malang, Indonesia, October 3, 2022. Photo: Willy Kurniawan, Reuters.

Soccer Stampede Toll 125

In other news, a soccer stampede in Indonesia killed at least 125 people on the weekend, with 17 children among them, officials said, as pressure builds on the Southeast Asian nation to explain how one of the world’s worst stadium disasters unfolded.

Officers fired tear gas on Saturday night to disperse agitated supporters of the losing home side who invaded the pitch after the final whistle in the East Java town of Malang. Arema FC lost 3-2 to Persebaya Surabaya in the local BRI Liga 1 match.

About 42,000 tickets had been issued for a stadium designed to hold 38,000 people, Indonesia’s chief security minister, Mahfud MD, said in an Instagram post.

An independent fact-finding team will investigate the sequence of events and help find those responsible for the disaster, Mahfud told a news conference on Monday.

Gilang Widya Pramana, the president of home side Arema FC, said he was ready to take full responsibility.

FIFA, the governing body of world soccer, has asked Indonesian football authorities for a report on the incident. Its safety regulations say firearms or “crowd control gas” should not be used at matches.

 

  • Reuters with additional editing by Jim Pollard

 

 

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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.