Based on the latest data from Statistics Indonesia (BPS), consumer prices in Indonesia grew 2.57 percent year-on-year (y/y) in February 2019, a near-decade low, and below our forecast of 2.75 percent (y/y). The last time we saw this low level of inflation in Indonesia was back in November 2009.
Government policies are key reason for low inflation, particularly the government’s efforts to keep the food supply at adequate levels (by carefully monitoring and acting once a shortage is on the horizon). Another key reason that allows low inflation in Indonesia is the government’s decision (which was already made and announced last year) to leave prices of subsidized fuels and electricity unchanged until late-2019.
On a monthly basis, consumer prices fell 0.08 percent in February 2019, led by a drop in food prices and prices of non-subsidized fuels. Food prices that experienced deflation last month included chicken meat, eggs, red onions, chillies, cooking oil and sugar. It is common to see deflation in February as prices are still easing after the peak in the December/January period, while food prices tend to ease ahead of the start of the big harvest season.
Read the full article in the February 2019 edition of our monthly research report. You can purchase the report by sending an email to email@example.com or a WhatsApp message to the following number: +62(0)8788.410.6944
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