Indonesia's central bank, Bank Indonesia, expects deflation of about 0.9 percent in September 2013. Statistics Indonesia, on the other hand, believes there will be limited inflation this month. Both institutions agree, however, on a forecast of at least 9 percent of inflation over full-year 2013. The bank's September forecast is based on a survey that was conducted in the second week of September. This survey showed that food commodities and government administered prices eased.
Inflation up to August in this calender year has already reached 7.94 percent. The country's high level of inflation is particularly inflicted by the government's decision to raise prices of subsidized fuels in late June. Indonesia's July inflation accelerated to 3.29 percent, while August inflation was still high at 1.12 percent. Due to the fuel issue, Bank Indonesia's inflation target had to be revised up from the 3.5-5.5 percent range to the 9.0-9.8 percent range for full-year inflation.
An official at Statistics Indonesia (Indonesia's bureau for statistics), however, said that there is a small chance of deflation in September. Despite a sharp decline in prices of peppers and onions, prices of other food products are still high. These products include cooking oil and chicken meat. Moreover, gold jewelry prices have increased sharply. Therefore, Statistics Indonesia forecasts low inflation in September unless prices of chicken meat, cooking oil, flour and sugar fall in the last week.
Statistics Indonesia also said that Indonesia's annual inflation rate may stay around 8 to 9 percent up to June 2014 before easing to a normal level.
(annual percent change)
¹ year to date
Source: Statistics Indonesia