Consumer Price Index; August 2020 Deflation Pulls Indonesia’s Inflation to New Two-Decade Low
As we predicted last month, August 2020 brought mild deflation to Indonesia. Based on the latest data from Badan Pusat Statistik (BPS), the consumer price index posted deflation of 0.05 percent month-on-month (m/m).
As a result, Indonesia’s annual headline inflation cooled further to 1.32 percent year-on-year (y/y), a new 20-year record low level.
We expected to see mild deflation in August 2020 because (1) the COVID-19 crisis has softened demand, and (2) the month of August typically brings mild deflation as food prices stabilize (after Islamic celebrations have caused a peak in consumption in June/July). Mild deflation or (very soft inflation) tends to extend into September and October as the harvest season arrives.
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