Indonesia's inflation was recorded at 0.22 percent month-on-month (m/m) in July 2017. On Tuesday morning (01/08) Indonesia's Statistics Agency (BPS) said July inflation was attributed to rising prices in most expenditure group indices, but particularly foodstuffs (+0.21 percent), processed food, beverages, cigarettes and tobacco (+0.57 percent), housing, water, electricity, gas and fuel (+0.06 percent), clothing (+0.06 percent), health (+0.15 percent), and education, recreation and sports (+0.62 percent).

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Indonesia's inflation rate in June 2017 was higher than previously estimated. The nation's Statistics Agency (BPS) announced on Monday morning (03/07) that monthly inflation was recorded at 0.69 percent last month, while estimates ranged between 0.50 - 0.60 percent (m/m). Traditionally, Indonesian inflation tends to be high in June as people's consumption rises amid the Ramadan and Idul Fitri festivities.

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Inflation is expected to have remained high in Indonesia in June 2017 amid the Ramadan and Idul Fitri celebrations, a period when increased consumption (especially consumption of food products) always triggers inflationary pressures in Southeast Asia's largest economy. Monthly inflation is estimated to reach around 0.50 percent in June. On Monday (03/07) Indonesia's Statistics Agency (BPS) will release the nation's official inflation figures.

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Indonesia's 10-year government bond yields are currently around 6.89 percent, or the highest among Asian nations. On the one hand, this makes Indonesian bonds attractive to investors but on the other hand it becomes more costly for the government. How come Indonesian bond yields remain high?

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The central bank of Indonesia (Bank Indonesia) expects Indonesia's inflation rate to rise to 4.36 percent year-on-year (y/y) by the end of 2017, a significant jump compared to the 3.02 percent (y/y) inflation rate in 2016 but still within the initial target range of Bank Indonesia (that is set at a wide range of 3 - 5 percent y/y). According to the latest data from Indonesia's Statistics Agency (BPS), Indonesia's annual inflation rate rose to 4.33 percent (y/y) in May, up from 4.17 percent (y/y) in the preceding month.

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Inflation continued to rise in Indonesia in May 2017 but at a slower pace than expected. According to the latest data from Indonesia's Statistics Agency (BPS), the annual inflation rate rose to 4.33 percent (y/y) in May, up from 4.17 percent (y/y) in the preceding month. The May inflation figure is the highest in 14 months. On a monthly basis Indonesian inflation was recorded at 0.39 percent (m/m) in May 2017.

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The central bank of Indonesia (Bank Indonesia) expects the nation's May 2017 inflation rate to be relatively high at 0.37 percent month-on-month (m/m) due to rising food prices and transportation tariffs ahead of the start of the holy Ramadan month (the Islamic fasting month). A Bank Indonesia survey shows inflation had climbed 0.27 percent in the first three weeks of May. As the Ramadan has started in the fourth week, inflationary pressures should rise sharper in these last couple of days of the month.

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Indonesia's Statistics Agency (BPS) announced the nation's April 2017 inflation figure was recorded at 0.09 percent month-on-month (m/m), a relatively high inflation figure for Southeast Asia's largest economy considering the month of April usually brings deflation to Indonesia due to the peak of the harvest season (which causes sliding food prices).

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Indonesia's inflation rate eased more than analysts had forecast in March 2017. Based on the latest data from Indonesia's Statistics Agency (BPS), Indonesian inflation fell to an annual rate of 3.61 percent (y/y) on the back of a monthly deflation rate of 0.02 percent in March 2017. The outcome also surprised Indonesia's central bank (Bank Indonesia). Up to the third week of March a Bank Indonesia survey showed inflation reached 0.05 percent.

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The central bank of Indonesia (Bank Indonesia) expects Indonesia's headline inflation to ease in March 2017 as food prices are under control and can therefore offset the inflationary pressures that are caused by administered price adjustments (higher electricity tariffs). In February 2017 Indonesia's inflation rate accelerated to 3.81 percent (y/y) due to the ongoing impact of the higher electricity tariffs that were introduced by the government in January as well as a number of big floods that curtailed distribution channels across parts of Sumatra and Java.

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It came as a big surprise to us when the central bank of Indonesia (Bank Indonesia) announced on 19 November 2020 (the day it concluded its two-day monetary policy meeting) that it decided to cut its benchmark interest rate (the seven-day reverse repo rate) by 25 basis points to 3.75 percent. Bank Indonesia also cut its deposit facility and lending facility rates by 25 basis points to 3.00 percent and 4.50 percent, respectively.

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The central bank of Indonesia (Bank Indonesia) decided to cut its benchmark interest rate ("BI seven-day reverse repo rate") by 25 basis points (bps) to 4.75 percent at the two-day policy meeting on 19 and 20 February 2020.

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On Monday 1 July 2019 Statistics Indonesia (BPS) released Indonesia’s latest inflation data. The data show that headline inflation in Southeast Asia’s largest economy eased to a level of 0.55 percent month-on-month (m/m) in June 2019, down from 0.68 percent (m/m) in May 2019 when price pressures peaked due to Ramadan and Lebaran celebrations. This period always gives rise to a significant boost in consumption, hence prices of foodstuffs peak. Meanwhile, people also tend to buy new clothes, bags and shoes because they want to look good at these celebrations.

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There is concern that the Indonesian government's plan to curb price increases of (non-subsidized) fuels in Indonesia will impact negatively on private investors' enthusiasm to invest in Indonesia's oil and gas industry. Earlier this week Arcandra Tahar, Deputy Minister at the Energy and Mineral Resources Ministry, informed that the government wants to regulate prices of fuels in order to keep inflation in check.

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The number of people who live in poverty in Indonesia fell by 1.19 million individuals, per September 2017, to 26.58 million, from 27.77 million poor people in March 2017 (Indonesia's Statistics Agency releases poverty data twice per year, covering the situation in the months March and September). This is a significant decline and therefore constitutes a very good development. In relative terms, Indonesia's poverty rate fell 0.52 percent from 10.64 percent to 10.12 percent (over the same period).

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Rising commodity prices are good for the Indonesian economy because the country is one of the world's biggest commodity exporters. However, rising commodity prices will also make it more difficult for the government to keep inflation within its target range of 2.5 - 4.5 percent year-on-year (y/y) in 2018.

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Bank Indonesia is content seeing Indonesia's inflation pace at a rather mild rate of 0.22 percent month-on-month (m/m) in July 2017. Dody Budi Waluyo, Executive Director of Economic and Monetary Policy at the central bank, said low and stable inflation is a positive asset for the economy as it supports the rupiah exchange rate as well as the investment climate and safeguards people's purchasing power.

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The central bank of Indonesia (Bank Indonesia) maintained its benchmark interest rate - the 7-day reverse repurchase rate - at 4.75 percent at the policy meeting on 17-18 May 2017, a decision that is in line with analysts' forecasts. Bank Indonesia said the decision is consistent with its efforts to maintain macroeconomic and financial system stability "by driving the domestic economic recovery process", while continue to monitor external threats stemming from US policy directions and geopolitical conditions, specifically in the Korea Peninsula, as well as domestic threats stemming from inflationary pressures and ongoing consolidation in the banking and corporate sectors.

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It is highly unlikely to see the continuation of deflation in April. Last month (March 2017) Indonesia recorded 0.02 percent of deflation, primarily on the back of easing food prices amid the big harvest season. This harvest season will continue into April and therefore we expect few (to none) inflationary pressures stemming from food products. However, administered price adjustments (specifically another round of higher electricity tariffs in March) will impact of April's inflation figure, while consumer prices may also start to feel the impact of the approaching Ramadan month.

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The central bank of Indonesia (Bank Indonesia) kept its benchmark interest rate (seven-day reverse repo rate) at 4.75 percent at the April policy meeting (19-20 April 2017), while its deposit facility rate and lending facility rate stayed at 4.00 percent and 5.50 percent, respectively. Bank Indonesia considers the current interest rate environment appropriate to face global uncertainties as well as rising inflationary pressures at home.

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