Inflationary pressures eased in September 2013 to a 0.35% rate of deflation (mtm), or 8.40% (yoy). The rate of deflation exceeded the projections contained within the Price Monitoring Survey conducted by Bank Indonesia and much lower than inflation expectations by some analysts. Abundant supply in the wake of horticultural harvests (shallots and chilli peppers), triggered a deep correction in food prices. In addition, sliding beef prices also exacerbated further deflationary pressures, with volatile foods recording deflation of 3.38% (mtm).
The easing of monthly inflationary pressures also affected core goods along with administered prices, achieving 0.57% (mtm) and 0.34% (mtm) respectively, in line with the dwindling impact of fuel price hikes and price corrections after the holy fasting month of Ramadan. The stable prices in September reflect Bank Indonesia’s projection that inflation will be low and return to a normal pattern starting from September and in the months ahead.
The balance of trade showed a surplus of USD $0.13 billion in August 2013 on the back of a decline in imports. The non-oil/gas trade balance totalled USD $1.03 billion, while the oil and gas trade balance deficit narrowed to USD $0.90 billion. Non-oil trade balance surplus in line with a decline in non-oil/gas imports (29.5% mtm) that rapidly outpaced the rate of decline in non-oil/gas exports (18.9% mtm). Non-oil/gas imports dropped to their nadir of 2013, primarily attributable to decreasing imports of capital goods, especially industrial transportation equipment. The drop-off in non-oil/gas exports was affected by lukewarm global economic growth and fragile export commodity prices, particularly exports of primary goods (coal, natural rubber as well as oil and vegetable oil) and manufactured goods (machinery and transportation equipment, chemical products, other lower consumer goods and other semi-manufactured products). In terms of oil and gas, the oil and gas trade balance in August 2013 narrowed as oil exports surged (25.2% mtm) in line with more oil lifting, while imports of oil slowed (12.8% mtm) as a result of sizeable buffer stocks subsequent to large-scale imports by Pertamina in July. The improving trade balance is consistent with Bank Indonesia’s projection that the current account deficit in the third quarter of 2013 will be less than the one in the previous quarter (USD $9.8 billion).
Jakarta, 1 October 2013
Difi A. Johansyah