Inflationary pressures in October 2023 were in line with our expectations. Based on the latest data from Indonesia’s Statistical Office (Badan Pusat Statistik, BPS), Indonesia’s headline inflation was recorded at a rate of 0.17 percent month-on-month (m/m) in October 2023. On an annual basis, inflation accelerated to 2.56 percent year-on-year (y/y), up from 2.28 percent (y/y) in September 2023.
Interestingly enough, October 2023 inflation was very similar to the situation in the previous month when higher non-subsidized fuel prices and higher food prices were the main contributors to inflation.
Just like happened in September 2023, state-owned energy giant Pertamina raised its prices of (non-subsidized) fuels at the beginning of October 2023 (namely, prices of Pertamax, Pertamax Green, Pertamax Turbo, Dexlite, and Pertamina Dex).
For example, the price of Pertamax was raised by 5 percent to IDR 14,000 per liter. While these price adjustments will certainly bring some inflationary pressures to Indonesia, it should not be felt too much. Firstly, the price increase is relatively mild, and secondly, the non-subsidized fuels are not the ones used by most transportation services (implying they won’t need to pass on these costs to customers/retailers).
What is also interesting to mention is that prices of these non-subsidized fuels went back down at the beginning of November 2023. And so, that paves the way for not too many price pressures in November 2023.
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