Indonesia's Central Statistics Agency (BPS) reported that the country's annual inflation rate in January 2025 stood at 0.76%. This figure is half of December 2024’s rate of 1.57% and less than one-third of the 2.57% inflation recorded in January 2024.

“January 2025's annual inflation rate is the lowest since January 2000,” said Acting Head of BPS, Amalia Adininggar Widyasanti, during a press conference on Monday, February 3.

In January 2000, annual inflation was recorded at 0.28%, marking a period of price stabilization after the economic crisis of 1998-1999.

Amalia explained that the consumer price index (CPI) rose from 105.19 in January 2024 to 105.99 in January 2025. The annual inflation was primarily driven by the food, beverages, and tobacco group, which saw an inflation rate of 3.69%, contributing 1.07% to overall inflation.

The largest contributors within this category were cooking oil, with a 0.14% impact, and machine-rolled clove cigarettes, which contributed 0.12%. Outside this group, gold jewelry also had a significant impact on inflation, contributing 0.36%.

Inflation occurred across all components except for prices regulated by the government. “This component experienced a 2.36% annual inflation and contributed the largest share of inflation at 1.51%,” Amalia added.

Meanwhile, BPS also noted that the volatile price component saw a 3.07% inflation rate, contributing 0.51% to the overall inflation. The key commodities in this category were bird's eye chili, rice, fresh fish, chicken eggs, and chicken meat.

Regarding inflation distribution across provinces, 30 provinces experienced inflation, while eight recorded deflation.

BPS highlighted that the highest inflation occurred in Papua Highlands at 4.55%, while the deepest deflation was recorded in Gorontalo at -1.52%.

Weak Consumer Purchasing Power

Pitter Abdullah, Executive Director of Segara Research, pointed out that several factors contributed to the low inflation in January 2025. One of these was weak consumer purchasing power due to widespread layoffs.

Additionally, he noted that inflation tends to moderate in January as part of a cyclical trend, following December’s inflation surge driven by the Christmas and New Year holidays.

“Another factor is government-regulated prices, such as electricity discounts,” Pitter told Katadata.co.id.

This article is published in partnership with Katadata

Original article here