Inflation in November 2013 continued to show a decelerating trend at 0.12 percent (month-to-month) or 8.37 percent (year-on-year). Although higher compared to October 2013 inflation (0.09 percent), November inflation was lower than its historical pattern in the last five years. The low inflation rate was influenced by deflation in the volatile food group with deflation of 0.57 percent (mtm), a result of the correction in chilli prices, especially in Java and eastern region of Indonesia as well as the decline in the chicken meat price in almost all areas of Indonesia.
Core inflation in November 2013 decelerated by 0.20 percent (mtm) compared to the previous month (0.34 percent, mtm). With the still ongoing trend of easing inflation, Bank Indonesia estimates that inflation by the end of 2013 will fall below 9 percent and moderate to 4.5 ±1 percent in 2014.
Meanwhile, Indonesia’s trade balance in October 2013 improved in accordance with Bank Indonesia’s forecast. In October 2013, the country's trade balance was back to a surplus of USD $0.05 billion, after previously recording a deficit of USD $0.81 billion in September 2013. The improvement of the balance was caused by the surplus in the non-oil and gas sector balance which increased to USD $0.79 billion, especially as it was supported by the improvement of non-oil and gas exports which grew 2.5 percent (yoy) due to the increase in the primary products export volume (crude palm oil and crude rubber) and manufactured products (among others textiles and textile products as well as electronic devices). In addition to that, non-oil and gas imports also contracted by 8.8 percent (yoy), particularly raw materials and capital goods, in line with the influence of the decelerating trend in domestic demand. On the other hand, the trade deficit in the oil and gas sector in October 2013 narrowed to USD $0.74 billion from the deficit of USD $1.31 billion in the previous month. The decline of this oil and gas trade deficit was influenced by the contraction of oil and gas import of 9.4 percent (yoy) and the increase of oil and gas export of 3.0 percent (yoy). In line with this development, Bank Indonesia believes that the current account deficit will continue to improve.
Difi A. Johansyah