Low purchasing power did not cause low Ramadhan inflation, says BI

Low purchasing power did not cause low Ramadhan inflation, says BI

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Jakarta — Bank Indonesia has said that low purchasing was not behind the unusually low inflation rate of 0.21 percent during the month of Ramadhan. BI economic and monetary policy director Reza Anglingkusumo said that low consumer purchasing power was usually marked by a decline in price. “Inflation and prices is the interaction between demand and supply. If supply is strong, inflation is low. Meanwhile, low purchasing power is usually indicated by declining prices,” Reza said on Tuesday (05/06). The Central Statistics Agency (BPS) announced on Tuesday that May inflation was 0.21 percent. Finance Minister Sri Mulyani Indrawati said this was the lowest inflation recorded during Ramadhan, which usually saw inflation reaching above 0.5 percent. Reza said the central bank still recorded a price hike in a number of commodities, but it was controllable. He said that the balance between supply and demand for the primary commodities sparked a price increase, he added. Reza also believed a change in people’s spending behavior, due to the longer Idul Fitri holiday, had contributed to the low inflation in May. “We are not seeing a decline in people’s purchasing power. The longer holiday could change the people’s spending habits. People may prefer to go their hometown to shop,” he said.

Source: thejakartapost.com/kompas.com

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