BPS: 4 Consecutive Months of Deflation Not Due to Slack Purchasing Power
The Central Statistics Agency (BPS) recorded that in August 2024, there was a monthly (m-t-m) deflation (a decrease in the consumer price index/CPI) of 0.03 percent. This means that for 4 consecutive months, there has been deflation or a decrease in the prices of goods and services.
BPS Deputy for Distribution & Service Statistics, Pudji Ismartini, stated during a press conference in Jakarta on Monday (2/9/2024) that the 4-month consecutive deflation was not due to weakening purchasing power.
Rather, it was more due to the influence of the supply side, as the harvest season led to an abundance of food and basic commodities in the market, causing their prices to continue declining.
Pudji explained that if there was pressure on public purchasing power, it would be reflected in non-food consumption. "Households would certainly restrain non-food consumption if their purchasing power was under pressure," she said.
Separately, Finance Minister Sri Mulyani Indrawati echoed a similar sentiment to the press. "A decrease in public purchasing power is usually reflected in core inflation. Core inflation is still growing positively. So, the August 2024 deflation was not due to that (a decrease in purchasing power)," she stated.
BPS recorded that the core inflation component in August 2024 (y-o-y) was 2.02 percent, m-t-m 0.20 percent, and y-t-d 1.52 percent.
Citing the Bank Indonesia website, core inflation measures the increase in the prices of goods and services excluding volatile food and administered prices, such as fuel. Therefore, core inflation becomes an indicator of public purchasing power from the consumption of secondary and tertiary goods, or non-food items.
