Consumer Price Index of Indonesia: 4th Consecutive Month of Deflation
Last month it was remarkable that Indonesia experienced three straight months of inflation (this rarely happens unless a crisis occurs). Considering August is typically a month without inflationary pressures this streak was expected to continue. Indeed, the Statistical Office (Badan Pusat Statistik, BPS) confirmed that deflation was 0.03 percent month-on-month (m/m) in August 2024.
As a consequence of mild deflation in August 2024, the year-on-year (y/y) headline inflation rate eased very slightly from 2.13 percent (y/y) in July 2024 to 2.12 percent (y/y) in August 2024 (which is the lowest annual inflation rate for Indonesia since February 2022).
Meanwhile, cumulatively, inflation in Indonesia has now reached 0.87 percent since the year-start, and so Indonesian inflation is very much under control, and it should help to make central bank officials confident about cutting the benchmark interest rate later this year (provided the US Federal Reserve cuts its rate first). The central bank of Indonesia (Bank Indonesia) has its outlook for national inflation in the range of 1.5–3.5 percent (y/y) for full-2024.
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