Juda Agung, the Executive Director of Economic and Monetary Policy Department at Bank Indonesia (BI), said that food prices would likely to contribute more to the inflation rate than fuel prices.
“Fuel is no longer the main cause of an increase in inflation rate,” Juda said in Lombok.
Juda told the finance commission at the House of Representatives five food commodities that are the major contributor to the inflation rate include rice, tuna, tomato, chili, and broiler chicken.
At a different occasion, Finance Minister Bambang Brodjonegoro predicted that the inflation rate in January 2015 would be at 0.1 or 0.2 percent, far lower than the average inflation rate in the previous month.
“Since the fuel price decreased, the inflation rate is very low,” he said.
Bambang added that, in terms of the inflation rate, Indonesia is far behind other South East Asian Countries, such as Malaysia, Thailand and Philippines. According to Bambang, the inflation rates in those countries are lower than Indonesia at 2 or 3 percent because those countries have no fuel price hike issues.
According to Bambang, in such countries that apply no fuel subsidy, a fuel price hike will not significantly affect the inflation rate. Indonesia, on the other hand, has a high inflation rate because a fuel price hike would be affected by fuel subsidy allocation.