DBS Bank Expects Indonesian Inflation to Remain Modest in December 2013
The DBS Bank expects that Indonesia's inflation rate will reach 8.2 percent (year-on-year) by the end of 2013, supported by a low monthly inflation rate in the last month of the year. The DBS Bank believes that the pace of inflation in December 2013 will be slightly higher than the country's November inflation (0.12 percent). In the period January to November 2013, inflation in Southeast Asia's largest economy has accumulated to 7.79 percent (yoy). The bank also stated that it expects inflation to reach 6.7 percent in full-year 2014.
Inflation in Indonesia accelerated significantly after the government increased prices of subsidized fuels in late June 2013. Particularly in July, it led to large inflationary pressures, although due to government compensation programs the inflation result was somewhat less severe (3.29 percent in July 2013) than previously forecast. Starting from September, however, inflation has been low and stable.
When several badly-handled food import quotas in combination with seasonal festivities (for example the holy month of Ramadan) contributed to high inflation in mid-2013, the central bank of Indonesia (Bank Indonesia) expected that the country's inflation rate would rise to nearly 10 percent by the end of the year. Fortunately, this turned out to be a too pessimistic view.
Consumer Price Index Indonesia:
(annual percent change)
¹ Year to date (January-November 2013)
Source: Statistics Indonesia