COVID-19 Results in the Lowest Ever Inflation Rate Recorded by Indonesia in 2020

Indonesia’s annual consumer price index (CPI) came in at 1.68 in 2020, with prices up 0.45% month-on-month in December 2020, according to Statistics Indonesia (BPS). This marks the lowest ever recorded inflation rate in the country’s history and remains below Bank Indonesia’s target range of between 2.0% and 4.0%.

Bank Indonesia data also revealed that annual core inflation (excluding food volatility and government-fixed prices), declined consistently in the nine months to December 2020 reaching 1.6%. In December 2020 alone, core inflation fell marginally to 0.05%, from 0.06% in November 2020, attributed to subdued household spending during the holiday season.

Although low levels of inflation are usually good for an economy, in this case, the inflatio...