Jakarta, Indonesia Sentinel — Indonesia has experienced a significant economic shift as the Central Statistics Agency (BPS) reported deflation for the fifth consecutive month in September 2024.
This deflation reflects a 0.12% decrease in the Consumer Price Index (CPI), which fell from 106.06 in August to 105.93 in September. This trend raises critical questions about the underlying factors contributing to the ongoing decline in prices.
In light of these statistics, President Joko Widodo (Jokowi) has urged the public to closely examine the reasons behind this deflation. He emphasized the importance of understanding whether this decrease in prices is due to improvements in supply and distribution, or if it results from a reduced purchasing power among consumers.
“What is causing the drop in prices? Is it due to good supply, effective distribution, and no transportation hurdles, or is it because of diminished purchasing power?” Jokowi remarked during a press conference at the new capital city, IKN, on October 6, 2024.
While the government acknowledges the deflation, Jokowi is keen to highlight the need for balance. He emphasized that both deflation and inflation must be managed effectively to ensure that prices remain stable and do not harm producers, including farmers, fishermen, small and medium enterprises (SMEs), and manufacturers.
“We must prevent prices from falling too low to protect producers, ensuring that farmers and others who produce are not adversely affected. Maintaining this balance is challenging, but we will strive to continue our efforts,” the President added.
The prospect of prolonged deflation raises concerns among the public, reminiscent of Indonesia’s economic downturn in 1999, when deflation persisted for seven months. The acting head of BPS, Amalia Adininggar Widyasanti, noted that deflation in 1999 was a result of various factors, including a significant drop in oil prices globally.
Indonesian Entrepreneurs Concerned Over the Impact of the Prolonged Deflation
Additionally, she pointed out that historical instances of consecutive monthly deflation, such as from December 2008 to January 2009, further underline the potential volatility of the Indonesian economy.
As the government navigates these economic challenges, it remains crucial for stakeholders to monitor the situation closely, ensuring that measures are in place to protect both consumers and producers while fostering a stable economic environment in Indonesia.
(Ray)
