Faisal Maliki Baskoro, Jakarta – Inflation in Indonesia cooled to an eight-month low in December as the cost of transportation, telecommunication and financial services stagnated, the Central Statistics Agency, or BPS, said on Thursday.

The consumer price index (CPI) rose 2.72 percent last month compared to the same month a year earlier, slower than November's 3 percent, BPS data showed.

The reading also implied the country closed 2019 with the lowest year-end annual inflation since 1999.

The core inflation, which does not account for volatile raw food prices and administered prices for subsidized fuel and electricity, was down slightly to 3.02 percent in December from 3.08 percent a month earlier.

BPS data showed that the cost of transportation, telecommunication and financial services hardly moved in 2019, with only a 0.02 percent increase since 2018.

Airfares – in 2018 the sixth biggest contributor to inflation – hardly rose in 2019.

Gold jewelry, red chili, rent, red onion, fresh fish, filtered clove cigarettes and rice were the top seven commodities that stoke up inflation in 2019.

The 2019 inflation was lower than the 3 percent projected by the Finance Ministry and Bank Indonesia, the country's central bank.

Tame inflation should provide room for the central bank to maintain its accommodative interest rate policy to prop up growth.

Bank Indonesia's benchmark interest rate now sits at 5 percent after four aggressive cuts last year. This was done because Southeast Asia's largest economy needed as much support as it could get with economic growth stagnating at around 5 percent in the last four quarters.

Source: https://jakartaglobe.id/business/indonesia-posts-lowest-inflation-on-record-in-20-years