In line with expectations, Indonesia’s inflation rate remained low despite the start of the Ramadan in the second week of April 2021. While the Ramadan typically gives rise to a big spike in food prices, the COVID-19 crisis has curbed demand in society.
It is the second year in a row that consumption in the context of Ramadan (and Idul Fitri) is curtailed. The government’s social and business restrictions (including a ban on the mudik), layoffs and wage-cuts, and people’s concern of contracting COVID-19 amid the pandemic is what is blocking consumption. Hence, Indonesia’s consumer price index (CPI) rose 0.13 percent month-on-month (m/m) only in April 2021.
However, demand does seem to have risen modestly compared to the same period last year (when Ramadan fell in the peak of the crisis and when the world still knew very little about the COVID-19 virus, hence many shopping centers were closed). So, Indonesia’s year-on-year (y/y) inflation, in fact, accelerated, albeit modestly, from 1.37 percent (y/y) in March 2021 to 1.42 percent (y/y) in April 2021.
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