In March 2016 Indonesia's inflation rate accelerated 0.19 percent (m/m) or 4.45 percent on an annual basis primarily on higher food prices. Sasmito Hadi Wibowo, Deputy of Distribution and Services Statistics at the country's statistics agency (BPS), agrees with Martowardojo. Wibowo also expects to see deflation in April on controlled food prices and lower energy tariffs (fuel and electricity).

After April, inflationary pressures are expected to rise as the harvest season ends in May while price pressures related to the Ramadan month and Idul Fitri celebrations start to increase. During these Islamic celebrations consumer spending on food products, shoes, clothes, etc. grows hence triggering inflationary pressures. Governor Martowardojo said it is important that the central government will carefully monitor potential price swings ahead of the Ramadan month in order to avert suddenly jumping prices (this can be averted by timely additional imports to stabilize food prices).

Read more: Premium Gasoline & Diesel Fuel Prices in Indonesia Cut per 1 April

Indonesian inflation has two traditional peaks: (1) June-August due to Ramadan, Idul Fitri and the new school year, and (2) December-January due to Christmas and New Year celebrations.

Indonesia's central bank maintains its inflation target in the range of 3-5 percent (y/y) in 2016.

Inflation in Indonesia:

Month  Monthly Growth
          2013
 Monthly Growth
          2014
 Monthly Growth
          2015
 Monthly Growth
          2016
January          1.03%          1.07%         -0.24%          0.51%
February          0.75%          0.26%         -0.36%         -0.09%
March          0.63%          0.08%          0.17%          0.19%
April         -0.10%         -0.02%          0.36%
May         -0.03%          0.16%          0.50%
June          1.03%          0.43%          0.54%
July          3.29%          0.93%          0.93%
August          1.12%          0.47%          0.39%
September         -0.35%          0.27%         -0.05%
October          0.09%          0.47%         -0.08%
November          0.12%          1.50%          0.21%
December          0.55%          2.46%          0.96%
Total          8.38%          8.36%          3.35%

Source: Statistics Indonesia (BPS)

Inflation in Indonesia and Central Bank Target 2008-2015:

   2008  2009  2010  2011  2012  2013  2014  2015
Inflation
(annual percent change)
  9.8   4.8   5.1   5.4   4.3   8.4   8.4   3.4
Bank Indonesia Target
(annual percent change)
  5.0   4.5   5.0   5.0   4.5   4.5   4.5   4.0

Sources: Statistics Indonesia and Bank Indonesia

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