Inflation in Indonesia is expected to accelerate to 6.80 percent year-on-year (y/y) in April 2015, from 6.38 percent y/y in the previous month, according to the central bank of Indonesia (Bank Indonesia). As global oil prices have somewhat recovered from their recent lows, they add inflationary pressures in Indonesia (higher transportation costs). On a month-on-month (m/m) basis, Indonesian inflation is expected to be around 0.35 percent in April. This figure would be in sharp contrast to ‘normal’ April inflation.
Normally, April tends to bring deflation to Southeast Asia’s largest economy as the harvest season reaches its peak (particularly due to the peak in rice production). This year, however, Bank Indonesia Governor Agus Martowardojo sees inflationary pressures brought about by higher transportation costs in April. The governor emphasized that the central bank will make efforts to curb price hikes ahead of the holy fasting month of Ramadan (when prices usually rise significantly due to high consumer demand).
Bank Indonesia expects to see relatively high inflation in April despite the government having announced to leave prices of low-gasoline fuel (premium) and subsidized diesel unchanged (or only slightly changed) for May 2015. Since the start of 2015 - when the government basically abolished its decade-old fuel subsidy system - the government sets these prices per month (based on Mean of Platts Singapore “MOPS” benchmark). However, the government still provides an IDR 1,000 per liter subsidy for diesel.
Inflation in Indonesia:
|Month|| Monthly Growth
| Monthly Growth
| Monthly Growth
Source: Statistics Indonesia (BPS)
Inflation in Indonesia 2008-2014:
(annual percent change)
Source: World Bank