The Subordinate Of Sri Mulyani: Is Low Inflation Beneficial Or Detrimental? The Answer Is Beneficial

KOMPAS.com/AKHDI MARTIN PRATAMA

The Subordinate Of Sri Mulyani: Is Low Inflation Beneficial Or Detrimental? The Answer Is Beneficial

Wednesday, 08 Jan 2025

The Ministry of Finance has indicated that a low inflation rate of 1.57 percent for 2024 is a positive development. Febrio Nathan Kacaribu, the Head of the Fiscal Policy Agency at the Ministry, elaborated that consumer spending in 2024 is expected to improve compared to 2023, with an increase of 4.9 percent. This figure surpasses the 4.8 percent growth in consumption recorded in 2023 relative to 2022.

"When asked whether consumption is improving or deteriorating, the answer is improving. As for whether low inflation is good or bad, the answer is good," he stated on Monday, January 6, 2024. Febrio noted that the low inflation rate is primarily influenced by controlled food inflation.

"In fact, there were one or two months of deflation. This was due to government efforts to manage food prices, in particular," he explained. He further mentioned that, in terms of purchasing power, core inflation has risen by 2.26 percent year-on-year. "This indicates that purchasing power is being monitored as quite resilient and favorable. We see this as a momentum that we must maintain into 2025," he clarified. The government has set an economic growth target of 5.2 percent, acknowledging the challenges that may arise in 2025. "We must ensure that the momentum achieved in 2024 can be sustained through careful navigation of all associated risks," he added. Additionally, the Central Statistics Agency (BPS) has reported Indonesia's annual inflation rate for 2024 at 1.57 percent, which, according to Pudji Ismartini, Head of the Distribution and Services Statistics Division at BPS, marks the lowest inflation rate in Indonesia since inflation calculations began in 1958.