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Latest Reports Inflation
In line with expectations, Indonesian inflation accelerated well beyond 1.0 percent month-on-month (m/m) in September 2022 after the government raised prices of subsidized fuels (Pertalite, Pertamax and diesel oil) on 3 September 2022.
On 06 October 2022 Indonesia Investments released the September 2022 edition of its monthly report. In this report we analyze the latest (and most relevant) economic, political, and social news from Indonesia.
Contrary to our expectations, Indonesia’s headline inflation showed some relatively steep deflation in August 2022. This was a sort of relief as we had seen five straight months of rapidly rising inflation in Indonesia between March and July 2022.
On 6 September 2022 Indonesia Investments released the August 2022 edition of its monthly report. In this report we analyze the latest (and most relevant) economic, political and social news from Indonesia.
In line with our expectations, Indonesia’s headline inflation rate approached the 5.0 percent year-on-year (y/y) mark in July 2022 as Indonesia’s Statistical Office (BPS) determined inflation at 0.64 percent month-on-month (m/m) in July 2022.
On 4 August 2022 Indonesia Investments released the July 2022 edition of its monthly report. In this report we analyze the latest (and most relevant) economic, political and social news from Indonesia.
At its latest monetary policy meeting, held on 18-19 April 2022, Bank Indonesia decided to leave its interest rates unchanged in an effort to facilitate the ongoing economic rebound. The benchmark interest rate (the BI 7-day reverse repo rate) was maintained at 3.50 percent, while the deposit facility and lending facility rates were kept at 2.75 percent and 4.25 percent, respectively.
Indonesian markets are back open after the week-long Idul Fitri holiday. And, it was not the greatest opening, with Indonesian stocks, bonds, and the rupiah under heavy pressure. Moreover, Indonesian inflation accelerated quite rapidly in April 2022.
Last month we started our inflation update stating that “the global threat of inflation has not reached Indonesia yet”. One month later, it now seems that a high inflation cycle has arrived in Indonesia; one that may continue in the next couple of months.
On Wednesday 6 April 2022 Indonesia Investments released the March 2022 edition of its monthly report. This report discusses key economic, political and social developments that occurred in Indonesia in the month of March 2022.
Latest Columns Inflation
After three months of high monthly inflation rates, Indonesia's inflation eased in September due to falling prices of food, transportation, communications and financial services after the Muslim celebrations of Idul Fitri, which always cause a spike in inflation, have passed. In September 2013, Indonesia posted deflation of 0.35 percent. It was the first time in 12 years that the country posted deflation in this month. The annual inflation rate eased to 8.40 percent from 8.79 percent in August 2013.
Inflationary pressures eased in September 2013 to a 0.35% rate of deflation (mtm), or 8.40% (yoy). The rate of deflation exceeded the projections contained within the Price Monitoring Survey conducted by Bank Indonesia and much lower than inflation expectations by some analysts. Abundant supply in the wake of horticultural harvests (shallots and chilli peppers), triggered a deep correction in food prices. In addition, sliding beef prices also exacerbated further deflationary pressures, with volatile foods recording deflation of 3.38% (mtm).
On this week's second day of trading (01/10), the benchmark stock index of Indonesia (IHSG) was able to post a 0.69 percent rise to 4,345.90 points despite ongoing concerns about the economic shutdown in the United States as discussions have not led to agreement about the country's debt ceiling. However, various data from Asia made a good impact. Indonesia's trade surplus in August and deflation in September contributed to positive market sentiments and provided a boost for the rupiah.
Investors are eagerly waiting for the release of Indonesia's September inflation rate. Indonesia has been hit by high inflation since the government decided to increase prices of subsidized fuels at the end of June. High inflation limits its people's purchasing power and as domestic consumption accounts for about 55 percent of Indonesia's economic growth, it thus impacts negatively on GDP growth, particularly after Bank Indonesia raised its benchmark interest rate (BI rate) from 5.75 to 7.25 percent between June and September.
The slowdown of Indonesia's economic growth is expected to continue into the third quarter of 2013. The Indonesian government predicts that economic growth will fall below the GDP growth figure realized in the second quarter (5.8 percent). Acting Head of the Fiscal Policy Agency Bambang Brodjonegoro stated that the main factor that causes the country's slowing economic growth in Q3-2013 is reduced household consumption. Domestic consumption in Indonesia accounts for about 55 percent of the country's GDP growth.
Indonesia's central bank, Bank Indonesia, expects deflation of about 0.9 percent in September 2013. Statistics Indonesia, on the other hand, believes there will be limited inflation this month. Both institutions agree, however, on a forecast of at least 9 percent of inflation over full-year 2013. The bank's September forecast is based on a survey that was conducted in the second week of September. This survey showed that food commodities and government administered prices eased.
Starting from May 2013, Indonesia's benchmark stock index (IHSG) has been on a weakening (bearish) trend inflicted by various reasons. First, in early May, Standard & Poor's downgraded Indonesia's credit rating due to the government's hesitancy to slash fuel subsidies. Then, the Federal Reserve started to speculate about ending its quantitative easing program. Capital outflows that followed indicated the vulnerable state of the Indonesian economy. Moreover, the controversial hike in fuel prices in late-June resulted in high inflation.
On Thursday (19/09), most currencies and stock indices outside the USA were bullish after the Federal Reserve decided to continue its massive monthly USD $85 billion bond buying program. Today (20/09), Asian currencies and stock indices took the foot off the gas as many investors sought to cash in on yesterday's gains. The MSCI Asia Pacific was still able to rise slightly (0.1 percent) after jumping 2.2 percent yesterday, but Indonesia's benchmark stock index (IHSG) plunged 1.86 percent (after gaining 4.65 percent yesterday).
Investors all around the world are in anticipation of the Federal Reserve's decision to scale back the monthly USD $85 billion bond-buying program known as quantitative easing (QE3). If indeed scaled back, then another important question remains: how much will the bond-buying program be toned down? Today (18/09), is the last day of the Fed's FOMC meeting in which these decisions are made. The market expects no drastic end to the program, instead a gradual toning down (between USD $10 to $20 billion) is anticipated.
Indonesia's poverty rate is expected to jump to between 11.13 and 11.37 percent of the total Indonesian population in 2013 due to inflationary pressures. Inflation may reach 9.2 percent at the year end. The new poverty forecast is significantly higher than the government's original target of 9.5 to 10.5 percent as set in the country's State Budget. The revised forecast was presented by Indonesia's Ministry of National Development Planning (Bappenas). Poverty basket inflation is expected to rise accordingly.
