Indonesia's consumer price index (CPI) fell by 0.09% year-on-year in February, marking the first instance of deflation since March 2000. This significant development was revealed by official data released in Jakarta on Monday, as reported by Reuters. The unexpected decline was well below the market's anticipated inflation rate of 0.60% and highlighted a notable shift in the country's economic conditions.
The deflationary trend was primarily driven by a decrease in the prices of certain essential foods, including rice, tomatoes, and red chilies. These food items saw a price reduction due to a recovery in production, following the adverse effects of a drought that impacted agricultural outputs last year. The resurgence in supply helped ease prices, contributing significantly to the overall decline in the consumer price index.
February's CPI figures also represented the second consecutive month where inflation remained beneath the central bank's target range of 1.5% to 3.5%. This deviation from the target reflects the broader economic adjustments underway as the nation navigates through changing market dynamics and external pressures.
In a bid to bolster economic growth, the Indonesian government introduced a substantial discount on electricity bills. This measure aims to stimulate domestic consumption and economic activity by reducing household expenses, thereby encouraging spending in other areas.
The latest deflationary figures underscore an important economic milestone for Indonesia, as it grapples with balancing inflationary pressures and economic recovery post-drought. The central bank and government are closely monitoring these developments to ensure stability and sustained growth within the targeted inflation range.