In the past five years, the average inflation figure in the month of July has been 0.85 percent month-to-month, or 4.5 percent year-on-year. As such, July 2014 inflation will be higher than the (recent) historic average. This is caused by higher electricity tariffs introduced at the start of July. Another seasonal factor that contributes to July inflation is the start of the new school year. However, the central bank still targets an inflation figure of between 3.5 and 5.5 percent for full year 2014.

Traditionally, Indonesian inflation accelerates significantly in the month of Ramadan and slows again in August (unless administered price adjustments are made by the government as happened in 2013 when high inflation was recorded in August due to the impact of the fuel price hike in June 2013). The other traditional peak in Indonesian inflation occurs in December and January due to Christmas and New Year celebrations.

Martowardojo said that other inflationary pressures can be caused by the looming El Nino weather cycle in the second half of 2014 and the volatile rupiah/US dollar exchange rate. According to the central bank governor, the key to safeguard a healthy inflation figure amid these conditions is securing sufficient domestic food supplies.

Inflation in Indonesia:

Month  Monthly Growth
          2013
 Monthly Growth
          2014
January          1.03%          1.07%
February          0.75%          0.26%
March          0.63%          0.08%
April         -0.10%         -0.02%
May         -0.03%          0.16%
June          1.03%          0.43%
July          3.29%  
August          1.12%  
September         -0.35%  
October          0.09%  
November          0.12%  
December          0.55%  
Total          8.38%          1.99%

 

     Inflation Rate
      June 2014
   Inflation Rate
  Calender 2014
  Inflation Rate
  year-on-year
General            0.43            1.99           6.70
- Core            0.25            1.88           4.81
- Administered Price            0.45            2.37          13.47
- Volatile            1.06            2.22           6.74

 

    2008   2009   2010   2011   2012   2013
Inflation
(annual percent change)
   9.8    4.8    5.1    5.4    4.3    8.4

Source: Statistics Indonesia

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