North Sumatra Inflation Eases but Chili Prices Remain a Concern

RRI.CO.ID, Jakarta - Inflation in Medan, North Sumatra, decelerated in September, rising by only 0.04 percent. This was below North Sumatra’s average inflation rate of 0.14 percent and also lower than rates recorded in Labuhan Batu and Pematangsiantar.

Labuhan Batu recorded monthly inflation of 0.13 percent, while Pematangsiantar recorded 0.16 percent. Both areas benefited from smoother distribution of certain commodities, particularly red chilies, which are a major contributor to food price increases.

Labuhan Batu has easier access to chili supplies from surrounding areas, with some of the produce also reaching Lau Cih wholesale market in Medan. Because the distribution chain is shorter than in Medan, price increases at each stage of distribution tend to be smaller.

In Pematangsiantar, chili supplies are supported by several nearby farming areas. Meanwhile, the relatively low inflation in Deli Serdang and Medan is believed to be partly attributed by government measures to control prices and maintain food supplies.

In the long term, inflation could be controlled by building partnerships between farmers and traders through interregional cooperation. Such cooperation should prioritize supplying agricultural products to North Sumatra before sending them to other provinces.

However, controlling inflation in October remains challenging. Chili prices have continued to fluctuate and reached around 100,000 rupiah per kilogram at the beginning of the month, while dry weather could further push prices higher in other areas.

Rice prices are another concern, despite North Sumatra entering the rice harvest season. The expected decline in rice prices has not yet been seen, meaning rice cannot offset much relief from rising chili prices, while inflationary pressures from outside North Sumatra remain significant.

Writer: Gunawan Benjamin (Economist, UISU)