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Latest Reports Inflation
On Sunday (04.02.2024) Indonesia Investments released the January 2024 edition of its monthly report. The report offers analyses of various economic, political and social topics that are relevant in the present.
On Friday 5 January 2024 Indonesia Investments released the December 2023 edition of its monthly report. The report informs readers on the latest -and in our opinion most relevant- economic, political and social developments in Indonesia.
Interestingly enough, November was the month that – so far – brought the biggest inflationary pressures to Indonesia in 2023. The latest data published by Indonesia’s Statistical Office (Badan Pusat Statistik, BPS) showed that headline inflation reached 0.38 percent month-on-month (m/m) in November 2023, higher than expected.
On Tuesday 5 December 2023 Indonesia Investments released the November 2023 edition of its monthly report. The report informs readers on the latest - and in our opinion most relevant - economic, political and social developments in Indonesia.
Inflationary pressures in October 2023 were in line with our expectations. Based on the latest data from Indonesia’s Statistical Office (Badan Pusat Statistik, BPS), Indonesia’s headline inflation was recorded at a rate of 0.17 percent month-on-month (m/m) in October 2023. On an annual basis, inflation accelerated to 2.56 percent year-on-year (y/y), up from 2.28 percent (y/y) in September 2023.
On Sunday 5 November 2023 Indonesia Investments released the October 2023 edition of its monthly report. The report informs readers on the latest - and in our opinion most relevant - economic, political and social developments in Indonesia.
As expected, inflationary pressures increased on a month-on-month (m/m) basis in September 2023. However, on a year-on-year (y/y) basis, Indonesian inflation eased quite significantly as the impact of the subsidized fuel price hike in September 2022 is now removed from the data. Based on the data from Indonesia’s Statistical Office (BPS), Indonesia’s headline inflation decelerated to a rate of 2.28 percent (y/y).
In line with our forecast, Indonesia recorded mild deflation in August 2023. Based on the latest data from Statistics Indonesia (BPS) Indonesian deflation was recorded at 0.02 percent month-on-month (m/m) in August 2023. But because deflation was milder than last year, Indonesia’s annual inflation accelerated to 3.27 percent (y/y).
On Thursday (07.09.2023) Indonesia Investments released the August 2023 edition of its monthly report. The report discusses a selection of key economic, political and social developments that were relevant in Indonesia in the month of August 2023.
Again, Indonesia experienced another month characterized by low inflation. Based on the latest data from Statistics Indonesia (BPS), Indonesian inflation was recorded at 0.21 percent month-on-month (m/m) in July 2023, significantly lower than the 0.64 percent (m/m) that was recorded in the same month one year earlier.
Latest Columns Inflation
The central bank of Indonesia (Bank Indonesia) expects to see deflation at 0.15 percent month-to-month (m/m) in February 2016. Bank Indonesia Governor Agus Martowardojo said lower (government) administered prices in combination with low core inflation will be the recipe for deflation in the second month of the year. The lower administered prices that are primarily the cause of deflation consist of fuel prices, air fares and 12-kilogram liquefied petroleum gas (LPG) canisters. In the first month of the year Indonesian inflation accelerated to 4.14 percent (y/y).
Tomorrow (05/02), Statistics Indonesia is scheduled to release Indonesia's official full-year 2015 economic growth figure. Nearly all analysts expect to see a figure that reflects the continuation of slowing economic growth. Southeast Asia's largest economy expanded 5.0 percent in 2014 and this is expected to have eased further to 4.7 percent or 4.8 percent in 2015 on the back of (interrelated) sluggish global growth, low commodity prices, and weak export performance. Domestically, Indonesia has or had to cope with high interest rates and inflation (hence curtailing people's purchasing power and consumption as well as business expansion).
New York-based financial services firm Standard & Poor's stated that Indonesia's banking industry will feel the negative impact of Indonesia's sluggish economic growth in combination with persistently low commodity prices next year. This combination may weaken profitability of the nation's banking industry. S&P puts Indonesia's economic growth in 2016 at 5 percent (y/y), below the International Monetary Fund's and World Bank's forecast as well as the central government's target, all at 5.3 percent (y/y).
Today, the World Bank released the latest edition of its flagship publication Indonesia Economic Quarterly, entitled "Reforming amid Uncertainty". In this edition the Washington-based institution states that global conditions remain unfavorable despite financial markets having stabilized since October. Meanwhile, the country was negatively affected by severe man-made forest fires and toxic haze which cost Indonesia an estimated IDR 221 trillion (USD $16 billion or 1.9 percent of the country's gross domestic product) in five months.
After having experienced two consecutive months of deflation in September and October, Indonesia is expected to see inflation again in November, primarily on higher food prices (chicken meat and rice). Agus Martowardojo, Governor of Bank Indonesia, expects an inflation rate of 0.2 percent (month-on-month) in November. This would mean that inflation in full-year 2015 is likely to reach 3 percent (y/y), in line with earlier estimates and within - or perhaps slightly below - Bank Indonesia's target range of 3 - 5 percent (y/y) of inflation in 2015.
The central bank of Indonesia (Bank Indonesia) is expected to keep its benchmark interest rate (BI rate) relatively high in order to safeguard Indonesia's financial stability in 2016 (instead of seeking accelerated economic growth through a rate cut). Despite easing pressures on inflation and the country's current account balance, Bank Indonesia Governor Agus Martowardojo said that persistent global uncertainty (referring to the looming US Fed Fund Rate hike and China's slowdown) justifies the tight monetary stance.
As Indonesia's inflation rate has eased to 6.25 percent (y/y) in October 2015 from 6.83 percent (y/y) in the previous month, and given that Indonesian inflation will ease more markedly in the last two months of 2015 as the impact of the subsidized fuel price hike in November 2014 will vanish, the central bank of Indonesia (Bank Indonesia) seems to have more scope to cut its current relatively high benchmark interest rate, hence giving rise to accelerated economic activity.
Today (22/10), the World Bank released the October 2015 edition of its flagship Indonesia Economic Quarterly, titled "In Times of Global Volatility". In the report the World Bank states that despite current ongoing global uncertainties (caused by looming monetary tightening in the USA and China's economic slowdown), which make macroeconomic management difficult in the year ahead, pro-active government action could offset the negative impact and may help to boost growth.
Indonesia's heavily depreciated rupiah makes it more difficult for Indonesians to study abroad or to send their children to universities abroad without having the financial aid in the form of a scholarship. For those that are thinking of making such a decision, they need to take into account the performance of the Indonesian rupiah as well as the inflation outlook in the country of destination. So far in 2015, the Indonesian rupiah has depreciated 18 percent against the US dollar, 9 percent against the euro, 14 percent against China's yuan, and 2.4 percent against the Australian dollar.
The central bank of Indonesia announced on Thursday (17/09) that it the country’s key interest rate (BI rate) at 7.50 percent, while maintaining the deposit facility rate at 5.50 percent and the lending facility rate at 8.00 percent. According to Bank Indonesia (BI) this decision is consistent with its efforts to push inflation towards the target corridor of 4±1 percent in both 2015 and 2016. In addition, the decision is also part of Bank Indonesia’s measures to anticipate possibilities of a Fed Fund Rate (FFR) hike.
