The pace of Indonesia's headline inflation was recorded at 0.10 percent month-on-month (m/m) in April 2018, a relatively high pace compared to April inflation in recent years. However, compared to the preceding month (when the consumer price index rose 0.20 percent m/m) Indonesian inflation eased. Meanwhile, on a year-on-year (y/y) basis inflation accelerated modestly to 3.41 percent (y/y) from 3.40 percent (y/y) in the preceding month. Calendar-year inflation accumulated to 1.09 percent in the first four months of 2018.

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The Asian Development Bank (ADB) stated in its Asian Development Outlook (ADO) report, which was released on Wednesday (11/04), that it expects the Indonesian economy to expand by 5.3 percent year-on-year (y/y) in 2018 and 2019 on the back of rising investment and an improvement in household consumption.

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Indonesia's Statistics Agency (BPS) announced that the nation's headline inflation rose 0.20 percent month-to-month (m/m) in March 2018 especially due to a rise in prices of fuel and spices. Meanwhile, on a year-on-year (y/y) basis, Indonesia's inflation rate accelerated to 3.40 percent in the third month of the year, up from 3.18 percent (y/y) in the preceding month but still comfortably within the central bank's target range of 2.5 - 4.5 percent (y/y) for full-year 2018.

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The Statistics Agency (BPS) announced that Indonesia's headline inflation reached 0.17 percent month-on-month (m/m) in February 2018. This is a lower inflation rate compared to February 2017 (+0.23 percent m/m), hence the country's annual headline inflation eased to 3.18 percent (y/y) in February 2018, from 3.25 percent (y/y) in the preceding month.

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Annual headline inflation in Indonesia eased to 3.25 percent year-on-year (y/y) in January 2018, from 3.61 percent (y/y) in the preceding month. The decline in Indonesian inflation was slightly steeper than had been estimated by analysts. The latest consumer price index data were released by Statistics Indonesia (BPS) just before noon on Thursday (01/02).

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Indonesia's consumer price index (CPI) finished the year 2017 at the level of 3.61 percent year-on-year (y/y), slightly higher than analysts' forecasts but well within the government's full-year inflation target of 4.3 percent. Indonesian full-year 2017 inflation was the nation's highest annual inflation since 2014 when inflation surged to 8.36 percent (y/y) due to fuel subsidy reforms.

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Indonesian inflation eased further in November 2017. Based on the latest official announcement of Statistics Indonesia (BPS), released on Monday morning (04/12), inflation was recorded at 0.20 percent month-on-month (m/m) in November, a relatively low figure for November inflation if we compare it to November inflation figures in recent years (see table below).

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Indonesian inflation accelerated by a modest 0.01 percent month-on-month (m/m) in October 2017, considerably lower than the average monthly October inflation rate in recent years. Low October 2017 inflation primarily comes on the back of stable commodity prices. In fact, in terms of food prices, there actually occurred deflation in Southeast Asia's largest economy.

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Indonesia's inflation rose by a mild 0.13 percent month-on-month (m/m) in September 2017, slightly above analysts' forecasts. On an annual basis, the country's inflation eased further to 3.72 percent (y/y). On Monday morning (02/10) Indonesia's Statistics Agency (BPS) released the latest consumer price index data of Southeast Asia's largest economy.

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Indonesia experienced 0.07 percent deflation on a monthly basis in August 2017 according to the latest data from Indonesia's Statistics Agency (BPS). The result is in line with expectations as inflationary pressures tend to ease in Indonesia after the Ramadan and Idul Fitri celebrations in the June-July period. On an annual basis, Indonesian inflation eased to 3.82 percent in August.

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Bank Indonesia decided to raise the BI rate by 25 bps to the level of 7.50 percent, with the Lending Facility rate and Deposit Facility rate raised to 7.50 percent and 5.75 percent respectively. This policy was taken in light of the persistently large current account deficit amid widespread global uncertainty. Therefore, the decision was taken in order to ensure that the current account deficit is reduced to a more sound level and inflation in 2014 returns to around 4.5±1 percent, thereby supporting sustainable economic growth.

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ICRA Indonesia, an independent credit rating agency and subsidiary of ICRA Ltd. (associate of Moody's Investors Service), publishes a monthly newsletter which provides an update on the financial and economic developments in Indonesia of the last month. In the October 2013 edition, a number of important issues that are monitored include Indonesia's inflation rate, the trade balance, the current account deficit, the IDR rupiah exchange rate, and gross domestic product (GDP) growth. Below is an excerpt:

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Indonesian car sales have already exceeded the one million mark in October 2013. In the January-October period, 1,018,786 car units were sold, a ten percent increase compared to car sales in the same period last year. Growing demand for cars in Indonesia indicates that this sector of Southeast Asia's largest economy is not influenced by current negative market sentiments, such as the sharply depreciated Indonesian rupiah exchange rate (against the US dollar), high inflation (8.32 percent yoy in October 2013), and slowing economic growth.

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Indonesia will most likely not meet its original GDP growth target of 6.3 percent (stipulated in the 2013 State Budget). Yesterday (06/11), it was announced by Statistics Indonesia that Indonesia’s GDP growth figure in the third quarter of 2013 was recorded at 5.62 percent (year-on-year, yoy), the weakest quarterly growth figure since 2009 when the global financial crisis impacted on Southeast Asia’s largest economy. In 2013, Indonesia feels the global impact again, in combination with domestic factors.

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Last week, the Jakarta Composite Index (IHSG) weakened. The benchmark stock index of Indonesia was affected by negative market sentiments brought on by domestic factors. Most importantly, the large-scale demonstrations across Indonesia by Indonesian workers who demanded for higher minimum wages as annual inflation has surged since June 2013 after prices of subsidized fuels were raised. These demands, however, jeopardize the attractiveness of Indonesia's investment climate.

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Indonesia's October inflation rate was well-received by investors. On Friday (01/11), Statistics Indonesia (BPS) announced that the country's inflation in October 2013 grew 0.09 percent. Easing inflation was mainly due to falling prices of raw foods and clothes. Year-on-year (yoy), however, Indonesia's inflation is still high at 8.32 percent, although showing a moderating trend from 8.40 percent (yoy) in September 2013 and 8.79 percent (yoy) in August 2013. Inflation had skyrocketed after subsidized fuel prices were raised by an average 33 percent in June.

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Forecasts for Indonesia’s gross domestic product (GDP) growth in 2013 and beyond have been revised down by all institutions, including the Indonesian government and central bank as well as international organizations such as the World Bank and the International Monetary Fund (IMF). Initially, the country’s economic growth was expected to reach around 6.5 percent in 2013. However, most institutions have downgraded forecasts for the country’s economic growth to below the 6.0 percent mark.

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The benchmark stock index of Indonesia (IHSG) was down 0.61 percent to 4,492.26 on its first trading day after the Idul Adha celebrations (when Muslims remember that Abraham was willing to sacrifice his son to God). The main reason why the IHSG was down on Wednesday (16/10) was due to continued uncertainty about the US debt ceiling issue, while the deadline (17/10) is closing in. Fitch Ratings put US Treasury bonds on Rating Watch Negative, which might be a first step before a downgrade.

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According to the Indonesian Cement Association (ASI), cement sales in Indonesia reached 41.6 million tons in the first three quarters of 2013, a 5.3 percent increase compared to domestic cement sales in the same period in 2012 (39.5 million tons), while Indonesia's cement exports jumped by 187 percent to 503 thousand tons. As such, total cement sales from January to September 2013 grew 6.2 percent to 42 million tons. Meanwhile, Semen Indonesia, Indonesia's largest cement producer, managed to expand its market share.

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Bank Indonesia’s Board of Governors decided to hold the BI Rate at a level of 7.25 percent, with rates on the Lending Facility and Deposit Facility held respectively at 7.25 percent and 5.50 percent. Bank Indonesia will continue to monitor global and domestic developments and further synergise the monetary and macroprudential policy mix in order to ensure that inflationary pressures remain under control, that rupiah exchange rate stability is maintained according to its fundamentals and the current account deficit is reduced to a sustainable level.

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