The hotness of chili is the inflation booster in Indonesia

The hotness of chili is the inflation booster in Indonesia

Chili is one of the strategic food commodities that has the potential to provide high profits for business actors in Indonesia. This commodity is also one of the contributing commodities and even an inflation booster due to seasonal price fluctuations where the potential price increases occur during extreme climates, namely long rain and drought, as well as moments of National Religious Holidays such as the Fasting Month, Christmas and New Year .

The long dry season that hit most of Indonesia today and is expected to continue until the end of September (BMKG Estimates), triggers chili production to decline, while public demand for chili is quite high. Declining production and high demand cause price increases. This price increase can be a contributor to inflation.

Based on the prognosis of production and national needs in 2019 (August 2019 Update), the Ministry of Agriculture calculated that for large red chili production has decreased since April and remained low until September. Likewise cayenne pepper experienced a decrease in production in June. This condition caused the national domestic balance to deficit in June and declined in the following months.

From the observation of the Central Statistics Agency (BPS) during June to August, at the retail level the price of cayenne pepper crept up, with an increase reaching 101.13% or an average of 8.43% / week. Likewise, the price of red chili which increased reached 71.71% with an average increase of 5.98% / week. The highest price peak occurred in the third week of August, namely for cayenne pepper reaching Rp 77,110 / kg and red chili reaching Rp 76,356 / kg

BPS recorded inflation in July 2019 of 0.31 percent, this figure is lower than in June 2019, which is 0.55 percent. Of the 82 CPI cities monitored, 55 cities experienced inflation. While 27 cities experienced deflation. The highest inflation was experienced in Sibolga at 1.88 percent, while the lowest was Makassar at 0.01 percent. Hot chili is the biggest inflation booster. The increase in the price of red chili in July contributed to inflation by 0.20 percent and the increase in the price of cayenne pepper contributed to inflation by 0.06 percent. An increase in the allocation of expenditure / household expenditure to buy chili peppers given the chilli price is quite high, the habits of people who often consume fresh chili contribute to the high price of chili in the country.

The impact of inflation can affect a country's economy. Not surprisingly, the government through the Ministry of Agriculture is trying to keep the inflation rate under control, one of which is maintaining the stability of the national chili prices. Government efforts to maintain stability include through market operations in the regions, cheap food titles, granting chilli seeds to the community and the presence of the Indonesian Farmers Store in providing chili supplies and cutting long supply chains.