As already known, a low inflation rate indicates a certain issue in the world’s trading activities, especially in Indonesia. As explained by the Governor of Bank Indonesia, the 0.21% inflation rate in May 2018 is the lowest, if compared to the past several years, particularly in entering Iedul Mubarak.
This can be positive because every year the inflation rate will usually increase in entering Iedul Mubarak holidays. The insignificant impact from the currency exchange rate also proves that analysis about the increasing inflation rate when the exchange rate is decreasing is not always right.
Based on data from Badan Pusat Statistik (BPS), the inflation rate in May 2018 was lower than 0.39% in May 2017. If compared to one month before the Iedul Mubarak, the inflation rate in May 2018 was also lower than the inflation rate in May 2017. In fact, compared to the year 2016 when the Fasting Month happened in June and Iedul Mubarak happened in July, the inflation rate was far higher, namely 0.66% in June and 0.69% in July.
According to BPS, the secure inflation rate in May is, among others, related to the controlled prices and stocks of rice. As said by the Minister of Finance of Indonesia, the inflation rate in May 2018 is actually a positive achievement. Usually, the inflation rate in entering the Iedul Mubarak Holidays could reach 0.5%, caused by the increasing price of staple supplies and other supporting indicators.
Yet, not all believe that low inflation is a positive sign. It is because of the low inflation rate in entering the Iedul Mubarak Holidays in 2018 can also because of the declining purchase power of the people, similar as occurred during Iedul Mubarak in 2015.