REPUBLIKA.COID, JAKARTA -- The government will keep a close watch on the inflation rate of volatile food components, including staple food items, in 2018.
The statement was made by Finance Minister Sri Mulyani in Jakarta on Tuesday during the House's plenary session on the government's response to the views of the House of Representatives' factions on the macroeconomic framework and the principle of fiscal policy for the fiscal year 2018.
"The potential for price fluctuations can be derived from the shifting planting patterns, basic commodity distribution, and climate change, so the government has made efforts to control food inflation through the price control strategy," Mulyani remarked.
Price control efforts are being made at the producer, distributor, and consumer levels. The government is striving to strengthen the supply side through a policy to increase food production, such as improving the planting pattern, providing processed products by the food industry, strengthening food logistics infrastructure in the regions, especially warehousing, providing data on the movement of goods, especially food commodities.
The government is also continuing to implement its infrastructure development policy and increasing economic productivity to boost the gross domestic product (GDP) and production capacity.
"Ahead, along with increasing the production capacity and GDP, economic growth can be optimized with the risk of controlling core inflation pressure due to better supply capability," she noted.
In addition, infrastructure improvements are part of the efforts to strengthen the distribution side, which aims to support the smooth flow of goods and distribution of services. Adequate infrastructure will also help to reduce the logistics and distribution costs to realize price stability.
The government also remains committed to continuing the program of allocating food subsidies and government reserve funds to stabilize food prices in order to maintain the public's purchasing power, especially on National Religious Day. The government has also pursued a policy of social protection programs and increased revenues to safeguard and strengthen the people's purchasing power.
"In a bid to overcome price fluctuations, the government is also pursuing a policy of importing food commodities for a certain period to ensure the availability of domestic supply," she noted.
The administered price component is another factor that has an impact on the inflation rate since the beginning of the year. The government has pursued a policy to reform energy subsidies in order to create more targeted subsidies although the policy puts pressure on inflation in general.
"However, the government is still striving to manage the risk of pressure, especially the management of inflation expectations, by considering the time of implementing the policy in order to take into account the people's purchasing power," the minister remarked.
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