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Indonesia’s inflation to stay above 5% in first half of 2023, central bank chief says

A woman shops at a supermarket in Bogor, West Java, Indonesia on Jan. 4, 2023. The country’s inflation has held above 5%, driven by high food prices.

Adriana Adie | Nurphoto | Getty Images

Indonesia’s inflation will remain above 5% in the first half of 2023 and below 4% in the second half, mainly due to high food prices, central bank governor Perry Warjiyo said on Sunday, warning that the fight to control inflation must continue.

“The game is not over, let us together anticipate inflation mainly food inflation,” Perry said at an event on Makassar, in South Sulawesi, where he urged local authorities to work with the central government to reduce inflationary pressures.

“We must control inflation because it relates to people’s prosperity and welfare,” he said. “Let’s strengthen synergy amongst stakeholders to control inflation.”

Indonesia’s Consumer Price Index rose 5.47% on a yearly basis in February, largely due to rising prices for fuel, rice, cigarettes and air travel, though core inflation unexpectedly slowed to 3.09%.

Prices of food, mainly rice and cooking oil, rose in most provinces during the past month, Perry said, and they are expected to rise further in coming weeks due to high demand ahead of the Muslim fasting month of Ramadan later this month and the Eid al-Fitr festival in April.

The El Nino weather phenomenon, resulting from a warming of the Eastern Pacific Ocean waters, is expected to lead to dry weather for Indonesia and reduce food output later this year, putting more upward pressure on prices.

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