DIGIVESTASI - Soaring rice and chili prices in Indonesia have attracted the attention of foreign media. In the news Saturday (3/2/2024), Digivestasi said Indonesia's inflation rate of 2.75% in February was due to rising food prices.

M. Habibullah, a senior official of the Central Statistics Agency (BPS), said the prices of rice, chicken meat, chili, and sugar were the biggest drivers of inflation in February.  According to the national rice price index monitored by the bureau, the retail price of rice has increased at an annualized rate of 19.28% in anticipation of production cuts, and reached a record high in February. Meanwhile, Indonesia expects a 17.52% decline in rice production in the January-April 2024 harvest season.

Core inflation, excluding government-controlled prices and volatile food prices, reached 1.68% in February. The INJ was unchanged from last month and fell below market expectations of 1.71%. 

Bank Indonesia (BI) announced last week that it targets volatile food inflation at around 5%. The agency believes the rise in food prices is only temporary as seasonal factors affect supply. Economists think the situation will not affect BI's interest rate policy. This is because the figure is still within BI's target. "BI will maintain interest rates until global risks, especially inflation, subside," said Maybank economist Myrdal Gunnart.

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