Monthly inflation at 0.28 percent is a relatively high number for Indonesia in the tenth month of the year. Over the past five years, monthly October inflation averaged 0.04 percent (excluding October 2014 when inflation soared 0.47 percent as newly inaugurated President Joko Widodo planned to raise subsidized fuel prices significantly).

At a press conference on Thursday (01/11) BPS Head Suhariyanto said there was an increase in prices in October 2018, especially prices of processed food items, rice and side dishes, air transportation tariffs, and cement. Meanwhile, higher prices of various fuels (which were raised per 10 October 2018) impacted on consumer prices.

Indonesia's October 2018 Inflation per Expenditure Group:

• Foodstuffs; +0.15 percent (m/m)
• Processed food, beverages, cigarette and tobacco; +0.27 percent (m/m)
• Housing, water, electricity, gas and fuel; +0.42 percent (m/m)
• Clothing; +0.54 percent (m/m)
• Health; +0.06 percent (m/m)
• Education, recreation and sports; +0.09 percent (m/m)
• Transportation, communication and financial services; +0.26 percent (m/m).

Read also: Analysis of Inflation in Indonesia

With the year-to-date inflation rate at 2.22 percent (January-October 2018), full-year inflation will surely fall comfortably within the central bank’s wide target range of 2.5 – 4.5 percent (y/y).

With two more months to go we expect Indonesia’s full-year 2018 inflation to reach 3.25 percent (y/y), a rather low rate by Indonesian standards. This would also mean that Indonesian inflation has been under control for four years in a row (the last time Indonesian inflation spiked out of control was in late-2014 amid subsidized fuel price adjustments).

Inflation in Indonesia:

Month M/M Growth
      2018
January      0.62%
February      0.17%
March      0.20%
April      0.10%
May      0.21%
June      0.59%
July      0.28%
August     -0.05%
September     -0.18%
October      0.28%
Year-to-Date      2.22%


Headline Consumer Price Index of Indonesia:

Month M/M Growth
      2013
M/M Growth
      2014
M/M Growth
      2015
M/M Growth
      2016
M/M Growth
      2017
January      1.03%      1.07%     -0.24%      0.51%      0.97%
February      0.75%      0.26%     -0.36%     -0.09%      0.23%
March      0.63%      0.08%      0.17%      0.19%     -0.02%
April     -0.10%     -0.02%      0.36%     -0.45%      0.09%
May     -0.03%      0.16%      0.50%      0.24%      0.39%
June      1.03%      0.43%      0.54%      0.66%      0.69%
July      3.29%      0.93%      0.93%      0.69%      0.22%
August      1.12%      0.47%      0.39%     -0.02%     -0.07%
September     -0.35%      0.27%     -0.05%      0.22%      0.13%
October      0.09%      0.47%     -0.08%      0.14%      0.01%
November      0.12%      1.50%      0.21%      0.47%      0.20%
December      0.55%      2.46%      0.96%      0.42%      0.71%
Total      8.38%      8.36%      3.35%      3.02%      3.61%

Source: Statistics Indonesia (BPS)

Inflation in Indonesia and Central Bank (BI) Target:

  2014 2015 2016 2017 2018
Inflation
(annual % change)
 8.4  3.4  3.0  3.6
BI Target
(annual % change)
 4.5  4.0  4.0  4.0  3.5

 

  2008 2009 2010 2011 2012 2013
Inflation
(annual % change)
 9.8  4.8  5.1  5.4  4.3  8.4
BI Target
(annual % change)
 5.0  4.5  5.0  5.0  4.5  4.5

Source: Bank Indonesia


Inflation in Indonesia by Component:

    October
2018 M/M
  October
2018 Y/Y
  October
2018 YTD
General     0.28%     3.16%     2.22%
Core     0.29%     2.94%     2.67%
Government Administered     0.32%     2.74%     1.60%
Volatile     0.17%     4.48%     1.58%
Energy     0.68%     3.12%     2.62%

Source: BPS

[...]

Read the full article in the October 2018 edition of our monthly research report. You can purchase this report by sending an email to info@indonesia-investments.com or a WhatsApp (WA) message to the following number: +6287884106944


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