Inflation in July 2016 was the lowest for five years.
Arief Kamaludin|KATADATA

The National Statistics Agency (BPS) recorded July inflation of 0.69 percent, up from 0.66 percent the previous month, but lower than Bank Indonesia’s projected figure of 0.74 percent.

“Inflation occurred in 78 cities. The highest was in Tanjung Pandan, at 2.34 percent, and the lowest in Gorantalo, at 0.06 percent. Deflation occurred in 4 cities. The highest in Jayapura, at 1.1 percent,” said BPS chief Suryamin in his office in Jakarta, Monday (1/8).

He added that two main categories were the cause of this inflation: food and transport. Food prices increased 1.2 percent on the previous month, and 6.81 percent compared with the same month last year. (Read: BI Predicts July Inflation of 0.74 Percent, Economic Fundamentals Stable).

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Transport, communications and financial services also saw inflation of 1.22 percent compared with last month, 3.77 percent compared with June 2015. Inflation in other components, included food (0.54 percent); housing, water, electricity, gas and fuel (0.24 percent); clothing (0.44 percent); and education, recreation and sports (0.51 percent).

“Because Eid fell on 6 July, the week 1-5 July was affected by the holiday exodus, up to the end of the holiday on 15 July,” he said. “The education component was affected by the new school year. Fortunately this was divided up, which mitigated the impact.”

Suryamin said that 10 components contributed to the inflation. For example, airline fares, which have a weight of 1.12 percent, were up 11.2 percent; and intercity road transport fares, which have a weight of 0.82 percent, were up 10.53 percent.

These fare rises were due to increased demand before and after Eid el-Fitr. The basic electricity tariff was up 1.12 percent, meaning an IDR 8 per kW tariff increase for 1,300 volt ampere customers. (Read:  Eid Exodus Pushes Inflation in Second Week of July to 1.18 Percent).

Other components contributing to the inflation included shallots, broiler chicken, potatoes, fresh fish, rice, red chillies and, gold jewellery, which saw price rises of 9.44 percent, 3.35 percent, 14.48 percent, 1.31 percent, 0.5 percent, 3.76 percent, and 1.52 percent, respectively.

In good news for the economy in general, core inflation was 0.34 percent up on last month’s figure and 3.49 percent up on the same period last year. Administered prices, meanwhile, were up 1.32 percent, contributing to the rise in the basic electricity tariff. The price of volatile food and energy increased 1.2 percent and 0.44 percent, respectively.

Although inflation in July was up on the figure for June this year, Suryamin said that inflation last month was the lowest for five years. Between 2012 and 2015, July inflation was 0.7 percent, 3.2 percent, 0.93 percent, and 0.93 percent.

These figures show a leap in inflation in July 2013, which was triggered by a combination of factors. For example, the government increase in the price of fuel oil, the new school year, and the fasting month and Eid holiday. (Read: Consumer Purchasing Power Stable, June Inflation at 0.66 Percent).

Previously, the Executive Director of BI’s Fiscal, Economic and Monetary Policy Department, Juda Agung, warned of higher inflation in July 2016, triggered mainly by an increase in airline fares during the Eid holiday. He also warned that traffic jams in the run up to and after Eid al-Fitr would affect distribution, resulting in price rises.