The inflation rate of the 'Sang Garuda' country showed a significant decrease for the month of August, but was still far from the 2%-4% target set by the government led by President Joko Widodo.
It is understood that Indonesia's headline inflation shrank from 4.94% in July, the highest annual level since October 2015, to 4.69% in August despite the rise in global fuel prices following the Ukraine crisis.
Commenting on the President who is fondly called Jokowi, price spikes caused by the increase in the cost of fuel and food can bring social unrest and political instability in Indonesia.
Because of that, President Jokowi has asked the Indonesian Interior Minister TiTo Karnavian to optimize the national budget to control inflation at the regional level while not burdening the people.
To support the policy, the Central Bank of Indonesia is said to raise its benchmark interest rate in August for the first time in 4 years to maintain the value of the currency and stabilize imports.
Karnavian explained, the action was taken as a result of aggressive tightening by the central banks of neighboring countries and the Federal Reserve (Fed) of the United States (US).
It should be noted that Indonesia is a net importer of oil and is highly dependent on food imports such as wheat, so disruptions in the global supply chain cause consumer prices in the country to rise.
Meanwhile, in comparison with Malaysia's inflation rate was 4.4% during July.
Looking at the numbers of the two countries, there is no significant difference but it should be noted that Malaysia has not yet reported the inflation rate for the month of August, which is expected to increase.
