Bank Indonesia Cuts 2015 Inflation Projection to 3.6%
The central bank of Indonesia (Bank Indonesia) expects to see a sharp slowdown in inflation in the last couple of months of 2015. Currently, the annual inflation pace stands at 6.83 percent (y/y). However, by the year-end Bank Indonesia estimates the consumer price index to have eased to 3.6 percent (y/y), which would be in the lower range of its 2015 inflation target (3-5 percent y/y). This update was given by Bank Indonesia Governor Agus Martowardojo when meeting the Financial Sector Stability Coordination Forum (FKSSK).
Last month Indonesia experienced deflation of 0.05 percent (m/m) on the back of lower food and transportation prices in the post-Ramadan and Idul Fitri season. However, annual inflation (+6.83 percent) is still high as the impact of higher subsidized fuel prices (that were implemented in November 2014) is still included in the inflation figure. Visible in the table below, inflation was high in the October-December 2014 period on expectation of - and reaction to - the implementation of higher subsidized fuel prices.
Furthermore, Bank Indonesia expects the country's gross domestic product (GDP) to accelerate by 4.85 percent (y/y) in the third quarter of 2015, from the six-year low of 4.67 percent (y/y) in the preceding quarter.
Inflation in Indonesia:
| Month | Monthly Growth 2013 |
Monthly Growth 2014 |
Monthly Growth 2015 |
| January | 1.03% | 1.07% | -0.24% |
| February | 0.75% | 0.26% | -0.36% |
| March | 0.63% | 0.08% | 0.17% |
| 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% | |
| November | 0.12% | 1.50% | |
| December | 0.55% | 2.46% | |
| Total | 8.38% | 8.36% | 2.24% |
Source: Statistics Indonesia (BPS)
Inflation in Indonesia 2008-2014:
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | |
| Inflation (annual percent change) |
9.8 | 4.8 | 5.1 | 5.4 | 4.3 | 8.4 | 8.4 |
Source: World Bank