Indonesia Plagued by Flooding; Impact on January Inflation Still Uncertain
Indonesia's Ministry of Finance is optimistic that the country's inflation rate can be kept at 5.5 percent in 2014 as demand and supply of goods is expected to remain stable although the depreciating rupiah exchange rate and weak state of the country's infrastructure will continue to provide inflationary pressures. Deputy Finance Minister Bambang PS Brodjonegoro expects inflation in January 2014 to be lower than in the same month last year (1.03 percent) but it remains uncertain the extent to which the current floods will impact on the inflation rate.
Due to the peak of the rainy season, heavy rainfall has triggered floods in several parts of Indonesia. At least 23 Indonesians died from drowning or electrocution in Jakarta and Manado (North Sulawesi) while tens of thousands of people needed to flee their houses. In Indonesia floods are a recurring problem at the start of the year as rivers burst their banks due to intense rainfall (however the issue is also partly blamed on logging and a failure to reforest in the hills around Jakarta). The high rainfall is expected to continue into February. Besides the social sorrow, flooding will also disturb the distribution of food products.
Last year, January recorded inflation of 1.03 percent. In that month more than 50,000 people were forced to relocate in Jakarta. So far in 2014, around 31,000 people have been displaced in the capital city.
| 2013 | Inflation |
| January | 1.03% |
| February | 0.75% |
| March | 0.63% |
| April | -0.10% |
| May | -0.03% |
| June | 1.03% |
| July | 3.29% |
| August | 1.12% |
| September | -0.35% |
| October | 0.09% |
| November | 0.12% |
| December | 0.55% |
| Total | 8.38% |
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | |
| Inflation (annual percent change) |
9.8 | 4.8 | 5.1 | 5.4 | 4.3 | 8.4 |
Source: Statistics Indonesia
Further Reading:
• Indonesia's High Rainfall Can Lead to Inflationary Pressures in January
• Low Indonesian Inflation Rate Expected to Continue into January 2014
• Analysis of Inflation in Indonesia
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