Statistics Indonesia (BPS) announced on Monday morning (04/05) that Indonesia’s inflation accelerated to 6.79 percent year-on-year (y/y) in April 2015. On a month-to-month basis, Indonesian inflation was recorded at 0.36 percent in April. Although this result is in line with analysts’ previous projections, April inflation realization is in sharp contrast with the ‘usual’ inflation pace in the fourth month of the year. Usually, Indonesia records slight deflation in April as prices ease amid the peak of the harvest season.
This year, however, Indonesia’s April inflation is high due to higher transportation costs following a fuel price hike in late March. Suryamin, Head of BPS, said that domestic transportation companies raised tariffs by an average of 1.80 percent in April from the preceding month. Another main factor that contributed to the 0.36 percent inflation pace in April was the 0.50 percentage point increase in the food, beverages, cigarettes & tobacco expenditure group.
Due to the impact of the harvest season, basic food prices declined 0.79 percent (m/m) in April. Particularly price pressures on rice, an important commodity in Indonesia, ease.
The country’s core inflation, which excludes volatile and government administered prices, was steady at 5.04 percent (y/y). Cumulatively, Indonesia experienced 0.08 percent deflation in the first four months of 2015.
In March 2015, Indonesia’s annual inflation was 6.38 percent.
The central bank of Indonesia (Bank Indonesia) previously stated that it will focus on maintaining price stability ahead of the Ramadan month (holy fasting month for the Muslim community). As the higher April inflation pace is in line with forecasts, Bank Indonesia is not expected to alter its interest rate environment after seeing the official April inflation figure. Currently, the central bank has its key interest rate (BI rate) set at 7.50 percent. Regarding full-year 2015, Bank Indonesia targets an inflation figure in the range of 3 to 5 percent (y/y).
Inflation in Indonesia:
|Month|| Monthly Growth
| Monthly Growth
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Source: Statistics Indonesia (BPS)
Inflation in Indonesia 2008-2014:
(annual percent change)
Source: World Bank