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Today's Headlines Inflation

  • Consumer Price Index: Deflation Due to a Drop in Prices of Foodstuff Commodities

    Consumer Price Index: Deflation Due to a Drop in Prices of Foodstuff Commodities

    In September Indonesia’s consumer price index (CPI) deflated by 0.27 percent month-to-month (m/m), particularly due to a decline in food commodity prices. This is good news as we had detected some potential threats to Indonesia’s inflation rate in the August 2019 edition of out monthly report. Meanwhile, Indonesia’s core inflation has remained stable, signaling that deflation is not caused by weakening purchasing power.

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  • Consumer Price Index Update: Indonesian Inflation Accelerates on Tuition Fees, Food & Gold Prices

    Consumer Price Index Update: Indonesian Inflation Accelerates on Tuition Fees, Food & Gold Prices

    In line with expectations, Indonesia’s inflation rate accelerated in August 2019. While the month of August normally brings mild deflation to Southeast Asia’s largest economy in the aftermath of the Ramadan and Idul Fitri celebrations (a period when demand for food and transportation peaks), Statistics Indonesia (BPS) announced that Indonesia’s monthly inflation in August was recorded at 0.12 percent month-to-month (m/m).

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  • Consumer Price Index: Indonesian Inflation Eases Below Central Bank’s Target Range

    Consumer Price Index: Indonesian Inflation Eases Below Central Bank’s Target Range

    Based on the latest data from Statistics Indonesia (BPS), which were released on 1 April 2019, Indonesian consumer prices continued to ease in March 2019 (in line with estimates). However, what is remarkable is that Indonesia’s annual inflation rate – 2.48 percent (y/y) in March 2019 – fell below the central bank’s target range (Bank Indonesia has set its inflation target for full-year 2019 at the range of 2.5–4.5 percent y/y). Indonesia’s latest inflation figure is the nation’s lowest inflation since December 2009. By Indonesian standards, inflation is currently remarkably low, hence it should manage to encourage household consumption.

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  • Consumer Price Index: Indonesia’s 2018 Inflation Slightly Below Our Forecast

    Consumer Price Index: Indonesia’s 2018 Inflation Slightly Below Our Forecast

    For the 4th year in a row Indonesian inflation was under control. Based on data from Indonesia’s Central Statistics Agency (BPS), the nation’s annual headline inflation rate was 3.13 percent in full-year 2018. By Indonesian standards, that is a low inflation figure. The final figure even fell below the central government’s 3.5 percent (y/y) target that was set in the 2018 state budget and it fell below our (revised) prediction of 3.25 percent (y/y). But it did fall conveniently within the central bank’s wide target range of 2.5 – 4.5 percent (y/y).

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Latest Columns Inflation

  • Car, Motorcycle & Cement Sales: Assessing Indonesia's Purchasing Power

    Car, Motorcycle & Cement Sales: Assessing Indonesia's Purchasing Power

    To assess Indonesia's purchasing power and consumer confidence it is always useful to take a look at car and motorcycle sales because when people are confident about their financial situation and have enough money to spend then they tend to buy cars and motorcycles (motorcycles are particularly popular among Indonesia's huge middle to lower-middle class segment). Meanwhile, cement sales inform about property and infrastructure development. Property development is also closely related to purchasing power and consumer confidence because property development grows when people's demand for property rises.

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  • Bank Indonesia Expects Deflation in February 2016

    Bank Indonesia Expects Deflation in February 2016

    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).

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  • Snapshot of the Indonesian Economy: Risks, Challenges & Development

    Snapshot of the Indonesian Economy: Risks, Challenges & Development

    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).

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  • S&P: Indonesia's Banking Industry Stable but Profitability May Weaken

    S&P: Indonesia's Banking Industry Stable but Profitability May Weaken

    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).

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  • World Bank Releases Indonesia Economic Quarterly "Reforming amid Uncertainty"

    World Bank Releases Indonesia Economic Quarterly "Reforming amid Uncertainty"

    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.

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  • Economic Update Indonesia: November Inflation Expected at 0.2%

    Economic Update Indonesia: November Inflation Expected at 0.2%

    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.

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  • Bank Indonesia Remains Committed to Tight Monetary Stance

    Bank Indonesia Remains Committed to Tight Monetary Stance

    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.

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  • Does Bank Indonesia Have Room to Cut its Key Interest Rate?

    Does Bank Indonesia Have Room to Cut its Key Interest Rate?

    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.

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  • World Bank Releases October 2015 Indonesia Economic Quarterly

    World Bank Releases October 2015 Indonesia Economic Quarterly

    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.

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  • Studying Abroad More Expensive for Indonesians as Rupiah Weakens

    Studying Abroad More Expensive for Indonesians as Rupiah Weakens

    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.

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