Keep inflation within target range

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JAKARTA (ANTARA) – The increase in the prices of goods and services will increase the cost of living for people, especially low-income earners and other vulnerable groups.

Controlling inflation is one of the important measures to maintain people’s purchasing power. In addition, during the post-epidemic economic recovery period, ensuring that inflation is under control is crucial, as high and unstable inflation will endanger people’s socio-economic conditions and welfare.

Therefore, the synergy, coordination and joint efforts between the central and local governments and all relevant stakeholders will form a combined force to control inflation and keep the inflation rate within the government’s target range of 2.5% (plus or minus 1%) in 2024.

Indonesia’s regions play a vital role in keeping the country’s inflation rate on target, with Java, the most populous island, playing a vital role in keeping the country’s inflation rate on target. Currently, Indonesia’s inflation rate remains within the target range, which is 2.13% year-on-year in July 2024.

According to the Directorate General of Population and Civil Registration, Indonesia’s population reached 282,477,584 in the first half of 2024.

Of these, 55.93% of the population live in Java. Therefore, it is crucial to ensure that inflation is controlled in Java and other parts of Indonesia.

Currently, the inflation rate in Java is stable and in line with the national inflation target. The inflation rate in the six provinces of Java is still within the target range of 2.5% (with a fluctuation of 1%).

On an annual basis, in July 2024, the inflation rates in Jakarta are 1.97%, in Banten 2.30%, in West Java 1.16%, in Yogyakarta 2.26%, and in East Java 2.13%. This inflation rate is expected to remain within the target range by the end of 2024.

However, Ferry Ilawan, deputy minister for macroeconomics and fiscal coordination at the Coordinating Ministry for Economic Affairs, pointed out that Java still faces challenges in controlling inflation in the future, including challenges in supply, risks of abnormal climate, and production to support food security.

The production of many food ingredients, such as rice, is not as high as in the first quarter. On the other hand, due to the arrival of the harvest season, the supply of some commodities will be high, increasing the possibility of price declines. These challenges certainly need to be addressed together.

The coordination meeting of the Central and Regional Inflation Control Team in Java (TPIP-TPID) agreed on three strategic steps to support inflation control to address these challenges.

The three major strategic steps are to overcome climate anomalies to increase food productivity, strengthen production in large-scale conversion of agricultural land, and strengthen the integrated food ecosystem from upstream to downstream through a pilot model.

Measures to increase food production under the risk of abnormal climate mainly include four aspects. The first is to strengthen and expand the implementation of IP300 (planting rice three times a year) and intercropping of rice and wetland rice. The second is to strengthen the implementation of soil block and greenhouse methods for various peppers.

The third point is to expand the use of true onion seeds (TSS), and the fourth point is to use weather-resistant seeds, implement organic farming, and use artificial intelligence (AI).

Efforts to enhance production amidst the massive conversion of agricultural land include three points: expediting the promulgation of the Sustainable Food Crop Land Conservation Area Ordinance and enforcing the President’s regulations on controlling the conversion of rice fields for protected rice land.

Other efforts include strengthening land expansion through the addition of new land and land optimization, urban agriculture promotion, utilization of unused land or swamps, opening up new rice fields, and strengthening intensification through the use of technology, supported by the mechanization of agricultural production facilities and agricultural facilities, including water extraction combined with water sources.

Meanwhile, efforts to strengthen the integrated food ecosystem include six points: compiling a regional food balance sheet as an early warning system, which will be launched in the Java region in September 2024; strengthening the implementation of the farmer partnership program and contract farming/off-takers; and expanding the implementation of the Regional Inflation Control Team (TPID) kiosk business model.

Other efforts include enhancing the use of post-harvest technologies and launching downstream businesses in food, especially when there is a surplus, to stabilize prices.

In addition, they include optimizing the use of insurance and agricultural financing for strategic food commodities, strengthening the capacities, capabilities and mindsets of farmers and agricultural extension workers in areas such as entrepreneurship, business management, finance and resources.

Support from local government

Restuardy Daud, director of the Regional Development Assistance Department of the Ministry of the Interior, said that local governments should continue to support inflation control in many aspects, namely strengthening cooperation between the Central Inflation Control Panel (TPIP) and TPID and various ministries and agencies, and increasing efforts in recalibrating activities and budgets.

In addition, regional trade cooperation is considered a necessary condition for strengthening supply allocation to maintain prices. Meanwhile, comprehensive technology utilization is another important aspect to improve supply and supply chain efficiency.

Regional governments should also continue to strengthen the provision of timely and accurate food price data and information to support policy making and implement credible policies to manage inflation expectations and keep them within the target range, especially amid the uncertain dynamics of the global economy.

The country’s strategic inflation control measures for 2024 include controlling volatile food inflation, strengthening coordination between central and local governments, enhancing synergy among ministries and agencies with the support of local governments, strengthening food security, and maintaining government rice reserves.

Get financing

Strengthening agricultural productivity requires financial support. To this end, the government has developed credit programs to support farmers, including low-interest People’s Commercial Credit (KUR) and Agricultural Equipment and Machinery (Alsintan) Commercial Credit.

Ilawan noted that as of July 30, 2024, Central Java province dominated in terms of KUR expenditure, amounting to IDR 28.32 trillion (about USD 1.8 billion).

Java’s KUR expenditure amounted to IDR 82.57 trillion (USD 5.25 billion), accounting for 49.68% of the country’s KUR expenditure.

Indonesian farmers can obtain credit or financing of between IDR 500 million (US$31,826) and IDR 2 billion (US$127,306) for agricultural equipment and machinery.

There are also special KURs for members of business groups that jointly manage with business partners, including community plantations, community agriculture, micro, small and medium enterprise (MSME) industries or other productive commodities.

The advantage of the special KUR is that beneficiaries in the production sector can repeatedly receive KUR at 6% interest, as the interest does not increase.

With financing support, farmers can optimize agricultural production, improve farmers’ welfare and support the sustainable growth of the national economy.

Furthermore, it is hoped that with the coordination and cooperation of all stakeholders, the inflation control strategy can be successfully implemented and support Indonesia in maintaining inflation within the target range by the end of 2024.

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