JAKARTA (Yosefardi) – Consumer price index (inflation) in December 2015 was recorded at 0.96% (mtm), up on the previous month due to volatile foods and administered prices, while core inflation remained relatively low.

Consequently, annual inflation for 2015 stood at 3.35% (yoy), which is within the central bank (Bank Indonesia/BI) target corridor of 4+/-1%.

During the reporting month, volatile food inflation was recorded at 3.53% (yoy), stemming primarily from red chilli, shallots and chicken meat.

On an annualised basis, inflation of volatile foods was low at 4.84% (yoy) despite disruptions from the ongoing El Nino weather phenomenon.

Food security was maintained through close coordination between Bank Indonesia and the Government, including the National and Regional Inflation Control Teams, which helped to boost production, facilitate uninterrupted distribution and minimise food price distortions.

Inflation of administered prices was recorded at 0.86% (mtm) in December 2015 as a result of adjustments to electricity rates and higher airfares during the holiday season.

Annually, administered prices recorded low inflation at 0.39% (yoy) on the back of cheaper global energy prices and domestic energy subsidy reforms, encompassing petrol and LPG prices as well as electricity rates. Core inflation was also low at 0.23% (mtm) or 3.95% (yoy).

Inflation expectations were anchored through BI policy to manage domestic demand, maintain exchange rate stability and steer expectations.

Moving forward, inflation was projected within the inflation target of 4+/-1% in 2016. Notwithstanding, policy coordination between BI and the Government to control inflation should be strengthened further, particularly in relation to administered prices and volatile foods.