A woman shops in a supermarket in Bogor, West Java, Indonesia on January 4, 2023. The country’s inflation has remained above 5%, driven by high food prices.

Adriana Adie | Nurphoto | Getty Images

Indonesia’s inflation will remain above 5% in the first half of 2023 and below 4% in the second half, mainly due to high food prices, central bank governor Perry Warjiyo said on Sunday, warning that the fight to control inflation must continue.

“The game is not over, let’s together anticipate inflation, mainly food inflation,” Perry said at an event in Makassar, in South Sulawesi, where he called on local governments to work with the central government to reduce inflationary pressures.

“We need to control inflation as it relates to people’s wealth and welfare,” he said. “Let’s strengthen synergies between stakeholders to control inflation.”

Indonesia’s consumer price index rose 5.47% year-on-year in February, largely due to rising prices for fuel, rice, cigarettes and air travel, although core inflation unexpectedly eased to 3.09%.

Prices of food, mainly rice and cooking oil, increased in most provinces in the past month, Perry said, and they are expected to increase further in the coming weeks due to high demand ahead of the Muslim fasting month of Ramadan later this month and the Eid al-Fitr festival in April.

The El Nino weather phenomenon, which is a result of warming waters in the eastern Pacific Ocean, is expected to lead to dry weather for Indonesia and reduce food production later this year, putting more upward pressure on prices.