Indonesia's inflation rate rises to a 5-year high

DNHN - DNHN - Consumer prices are rising sharply in Southeast Asia's largest economy, which has been hit by soaring oil prices and disruptions in global supply chains due to Russia's conflict with Ukraine.

Indonesia's inflation rate in June saw its biggest jump in nearly five years as more and more businesses raised prices for consumers due to rising raw material costs.

Indonesia's inflation rate rose to 4.35% in June, the biggest year-over-year increase since June 2017. The inflation rate has surpassed Bank Indonesia's forecast by 2%-4% this year.

Margo Yuwono, head of the country's Bureau of Statistics, said the main causes of inflation in June were the price of food, drinks and tobacco, which all increased by 8.26%. He also said that airline tickets have increased sharply due to high fuel costs.

Consumer prices are surging in Southeast Asia's largest economy, which has been hit by soaring oil prices and disruptions to global supply chains due to Russia's conflict with Ukraine. The war is also affecting palm oil prices, and despite being the world's largest palm oil producer, Indonesia is suffering from a shortage of cooking oil that fuels overall food inflation.

Josua Pardede, the chief economist at Permata Bank, predicts inflation this year will be between 4% and 4.5%.

The Governor of Bank Indonesia, Perry Warjiyo, in mid-June said inflation this year is expected to surpass the bank's target.

The central bank has kept a steady level on key policies, but many economists expect it to raise interest rates as early as the third quarter to curb inflation.

Cam Tu