Inflation

In simple inflation is defined as the increase in general prices and continuously. The increase in the price of one or two items alone can not be called except when rising inflation was widespread (or the resulting price increase) on other goods. The opposite of inflation is called deflation.

Indicators are often used to measure the rate of inflation is the Consumer Price Index (CPI). Changes in the CPI from time to time showing the price movement of a package of goods and services consumed by society. Since July 2008, the package of goods and services in the CPI basket has been done on the basis of Cost of Living Survey (SBH) in 2007 conducted by the Central Statistics Agency (BPS). Then, the BPS will monitor the price development of goods and services on a monthly basis in several cities, in traditional and modern markets for some types of goods / services in each city.

Other inflation indicators based on international best practice include:

Wholesale Price Index (WPI). Wholesale Price of a commodity is the price of the transaction between the seller / merchant the first major with a buyer / trader next big market in large numbers at the first of a commodity. [More detailed explanation about the WPI can be viewed at the web site www.bps.go.id Statistics]

Gross Domestic Product Deflator (GDP) price level measurements describe goods (final goods) and services produced within an economy (country). GDP deflator is produced by dividing nominal GDP at current prices by GDP at constant prices.

Grouping Inflation

Inflation as measured by the CPI in Indonesia is grouped into 7 groups of expenditures (based on the Classification of individual consumption by purpose - COICOP), namely:

1.       Food Group

2.       Food Groups So, Beverage, and Tobacco

3.       Housing Group

4.       Clothing

5.       Group Health

6.       Group Education and Sports

7.       Transport and Communications Group.

Source: Bank Indonesia