Understanding Inflation

In economics, inflation is a process of rising prices in General and continuous (continue) with regard to market mechanisms that can be caused by a variety of factors, among others, the Community consumption increased liquidity in the market berlebihnya, which triggered the consumption or even speculation, to include also ketidaklancaran due to the distribution of goods. In other words, inflation is also a process of declining currency values continuously. Inflation is the process of an event, rather than the tinggi-rendahnya price level. That is, the price levels were considered high is not necessarily indicate inflation. Inflation is the indicator to see the rate of change, and is considered to occur if the process of price increase takes place continuously and mutual influence-influence. The term is also used to describe the inflation increase in money supply which is sometimes seen as the cause of rising prices.

BI Call Inflation Ramadan this year is the best

The Central Bureau of statistics (BPS) announced inflation in June 2015 reached 0.54 percent (mtm) or 7,26 percent (yoy). The figure was higher than the previous month’s inflation amounted to 0.50 percent.
The Director of the Communications Department of the Bank Indonesia (BI), Peter Jacobs, said the rise in inflation was driven by price increases of foodstuffs entered the month of Ramadan. However, he saw the realization of Ramadan this year inflation is lower than in previous years.

“Inflation in June were lower than the estimates of the Bank of Indonesia,” he said in a BI, Jakarta, Thursday (2/1/2015).

He explains, volatile food inflation increased to 1.74 per cent (mtm) or 8,83 percent (yoy). This is caused by the increase in the price of red chillies and meat chickens ras.

According to him, the volatile food inflation is lower than the volatile food inflation in the month of Ramadan in the previous year. In line with the efforts of the Government price stabilization, either in the Centre or area, in the last few weeks.

Meanwhile, core inflation increased limited be 0.26 percent (mtm) or 5.04 percent (yoy), fueled by the still weak domestic economy and keep inflation expectations terkendalinya.

On the other hand, inflation is restrained enough i.e. administered prices of 0.26 per cent (mtm) or 13, 14 percent (yoy), mainly donated by the increase in electricity rates and gasoline prices nonsubsidi.

He added, BI has continued to observe the various risks that affect inflation, especially the development of world oil prices, exchange rates, the adjustment of administered prices, and the impact of El Nino. He’s assess with the above conditions, BI are still optimistic inflation this year is dikisaran 4 plus minus 1 percent.

“Based on the development of inflation up to June, BI looked that inflation target 2015 by 4 plus minus 1 percent can still be achieved with the support of the strengthening of the coordination of the policy of controlling inflation at the level of the Center and the regions,” according to him.



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