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Energy subsidy, social aid maintain people's purchasing power: BPS

Tempo - August 5, 2022

Hendartyo Hanggi, Jakarta – Statistics Indonesia (BPS) Head Margo Yuwono said policies of subsidies and social aid, as well as benchmark interest rates, were quite effective in controlling domestic inflation, maintaining people's purchasing power, and ensuring a conducive business climate.

"The government applies a subsidy policy, especially energy subsidies to contain prices that can suppress inflation. Moderate inflation growth shows that purchasing power is maintained," said Margo in a virtual press conference on Friday, August 5, 2022.

He assessed that fiscal policy by providing subsidies, especially energy, and social assistance for the low-income people, increased purchasing power.

It was evident from the core inflation that could still be maintained albeit there was a hike. "When [the inflation rate] rises in moderate, it shows that the purchasing power is getting better. Because of that, the inflation is still at 2.63 percent at the end of last month," Margo explained.

BPS noted that household consumption, which was at 2.92 percent year-on-year, was the highest contributor to the economic growth in this year's second quarter.

Meanwhile, from monetary policy, Indonesia did not follow the policies of other countries such as the U.S. At present, Bank Indonesia still holds a benchmark interest rate of 3.5 percent.

This, Margo went on, also provided a conducive situation for business players, so that all economic activities are still running well. "With the consumption drive and various policies, the Indonesian economy still grew 5.44 percent in the second quarter of 2022," he concluded.

Source: https://en.tempo.co/read/1619594/energy-subsidy-social-aid-maintain-peoples-purchasing-power-bp