Contrary to reports last week, the central bank of Indonesia (Bank Indonesia) expects that the country's January inflation rate may exceed 1 percent due to the disturbance of food products distribution amid severe floods in several cities in Indonesia, particularly Jakarta and Manado. Higher food prices are expected to add 0.3 percent to the monthly inflation rate. Apart from the flood issue, higher LPG as well as electricity tariffs (in the industry sector) will also contribute to January 2014 inflation.
High rainfall due to a peak in the rainy season (an annual phenomenon in the first month of the year) have resulted in at least 28 casualties (due to landslides, electrocution or drowning), tens of thousands of displaced people, and disrupted distribution systems in various locations across Indonesia.
Meanwhile, Indonesia's government agreed to increase industry's electricity tariffs up to 64.7 percent (which will be implemented in May 2014), while at the start of the month the price of LPG was raised by 18 percent to IDR 6,850 per kilo (USD $0.57).
On a historical basis, Indonesia's monthly inflation rate in January is in the range of 0.8 to 1.0 percent. On 3 February 2014, Statistics Indonesia will release January's official inflation data.
(annual percent change)
Source: Statistics Indonesia
• Indonesia Plagued by Flooding; Impact on January Inflation Still Uncertain
• Indonesia's High Rainfall Can Lead to Inflationary Pressures in January
• Low Indonesian Inflation Rate Expected to Continue into January 2014
• Analysis of Inflation in Indonesia