On Monday (02/12), Statistics Indonesia (BPS) announced that Indonesia's annual inflation rose slightly to 8.37 percent (year-on-year), from 8.32 percent in October 2013.

2013    Inflation
January      1.03%
February      0.75%
March      0.63%
April     -0.10%
May     -0.03%
June      1.03%
July      3.29%
August      1.12%
September     -0.35%
October      0.09%
November      0.12%
Total      7.79%
    2008   2009   2010   2011   2012   2013
Inflation
(annual percent change)
   9.8    4.8    5.1    5.4    4.3    7.9¹

¹ Year to date (January-November 2013)
Source: Statistics Indonesia

Because Indonesia's inflation is stable, it is expected that Bank Indonesia (Indonesia's central bank) will not raise its benchmark interest rate (BI rate) again in 2013. Between June and November 2013, Bank Indonesia gradually raised the BI rate from 5.75 percent to 7.50 percent in order to combat high inflation and limit imports, thus improving the current account balance as well as the Indonesian rupiah exchange rate, which has depreciated sharply against the US dollar. However, in anticipation of the winding down of the Federal Reserve's quantitative easing program, Bank Indonesia may raise its BI rate in the first quarter of 2014.

By the end of the year, inflation is expected to reach 8.5 percent, significantly lower than the assumptions of the Indonesian government and Bank Indonesia. Both institutions had revised up their forecasts for inflation after the fuel price hike to between 9.0 and 9.8 percent.

Further Reading:

Inflation in Indonesia
Analysis of Indonesia's October Inflation and September Trade Deficit
Indonesia's October 2013 Trade Surplus Provides a Glimmer of Hope

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