Consumer Price Index Indonesia: July Inflation under Control
The central bank of Indonesia (Bank Indonesia) expects to see Indonesian inflation in July in the range of 0.46 - 0.60 percent month-on-month (m/m). Inflation in Indonesia always peaks during the months June, July and August due to increased consumer spending in the context of Ramadan and Idul Fitri celebrations as well as the start of the new school season. Earlier this month, Governor Agus Martowadojo said to expect annual inflation to dip below 7 percent in July, from 7.26 percent (y/y) in June.
Meanwhile, Standard Chartered Bank economist Eric Sugandi expects July inflation at 0.75 percent (m/m), or, 7.1 percent (y/y). Sugandi added that Indonesia’s July inflation will not peak as high as in the previous two years as Indonesians’ purchasing power has been curbed amid the economic slowdown, high interest rate environment, weak commodity prices and prolonged high inflation level. He also emphasizes that government intervention has managed to curb inflationary pressure on certain products.
Sugandi detected weak domestic demand during this year’s Idul Fitri period and says the government should pay attention to this and make efforts to boost domestic consumption. One key strategy to boost such consumption is through improved government spending. So far this year there has been a delay in government spending hence limiting job availability and general economic growth of Southeast Asia's largest economy.
• Inflation Indonesia Update June: Consumer Price Index Up 0.54% m/m
Inflation in Indonesia:
|Month|| Monthly Growth
| Monthly Growth
| Monthly Growth
Source: Statistics Indonesia (BPS)
Inflation in Indonesia 2008-2014:
(annual percent change)
Source: World Bank