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Today's Headlines Inflation

  • JP Morgan: Why Should You Continue to Purchase Stocks?

    In recent months, positive fundamentals have coloured stock indices green. Despite volatility, these positive fundamentals remain today. Therefore, analysts of JP Morgan emphasize that people should not turn their backs to stock markets now. Risks are obviously always present but the analysts stress that people should not be too concerned about ongoing volatility. In fact, volatility should be used to one's advantage by purchasing when the index is low. Below are five arguments that JP Morgan mentions as reason to keep buying stocks.

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  • Statistics Indonesia: Indonesia Records Deflation of 0.03 Percent in May

    According to data released by Statistics Indonesia (Badan Pusat Statistik, abbreviated BPS), a non-departmental government institution, Indonesia's inflation figure eased 0.03 percent (month-to-month) in May 2013. The Head of BPS, Suryamin, said that it was the first time since ten years that the country experienced deflation in the month of May. The deflation figure is particularly triggered by the government's policy to allow for more imports of certain food products (such as onions, garlic, tomatoes, and chili).

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  • Indonesian Government and Commission XI Agree on Budget Revision

    The Indonesian government and Commission XI of the House of Representatives (DPR) agreed on several macroeconomic projections for the 2013 Revised State Budget (RAPBN-P 2013). The government requested a number of modifications to the 2013 State Budget as earlier assumptions, mentioned in the original 2013 State Budget, were not in line with the current economic conditions. Before reaching the agreement, fractions in the commission changed a number of proposed revisions of the government.

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  • Indonesian Government: Inflation Rises in 2013, but Eases in 2014

    The government of Indonesia expects inflation to rise to 7.2 percent in 2013 because of the increase in the price of subsidized fuel in June, and expects it to ease to 4 percent in both 2014 and 2015 provided that good monetary policy is implemented. This good monetary policy should particularly be targeted at maintaining food security. The projections were presented by the Fiscal Policy Agency (Badan Kebijakan Fiskal), the Ministry of Finance, and Indonesia's central bank Bank Indonesia.

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  • Bank Indonesia Revises Down GDP Growth, Interest Rate Kept at 5.75%

    The central bank of Indonesia (Bank Indonesia, or BI) kept its benchmark interest rate at 5.75 percent and its overnight deposit facility rate (FASBI) at four percent as the country's core inflation figure is still within the target range of the central bank (3.5-5.5 percent). Core inflation currently stands at 4.12 percent (YoY). However, as the price of subsidized fuel is expected to rise in June, inflation may increase and could trigger a policy response by Bank Indonesia later this year.

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  • Bank Indonesia's Benchmark Interest Rate and New Finance Minister

    Analysts expect that Indonesia's central bank (Bank Indonesia) will maintain its benchmark interest rate at 5.75 percent in tomorrow's meeting (14/05/13). This rate, a historic low rate for Indonesia, has been in force since February 2012. The central bank's deposit facility (Fasbi) is also expected to be kept at 4 percent. The position of Governor of Bank Indonesia - currently held by Darmin Nasution - will be taken over at the end of this month by Agus Martowardojo.

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  • Asia Development Bank (ADB) Also Warns for Asset Bubble in Asia

    Similar to the International Monetary Fund (IMF), the Asia Development Bank has warned that Asia can become hit by an asset bubble as central banks are loosening monetary policy. Besides Japan's program to inject USD $1.4 trillion into the domestic economy, America's Federal Reserve and United Kingdom's Bank of England will increase their money supplies to spur economic growth. These measures can result in economic overheating as well as asset bubbles across the Asian region.

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  • Indonesia Experiences Deflation of 0.10 Percent in April

    In April 2013, Indonesia's inflation rate eased 0.10 percent month-on-month, or 5.57 percent year-on-year. According to Statistics Indonesia (Badan Pusat Statistik, abbreviated BPS) April's deflation was triggered by easing food and clothes prices. Food items that became cheaper last month included garlic, chili, and chicken meat. Particularly rice contributed to the country's deflation as the harvesting season in Indonesia has set in. Core inflation is 4.12 percent (YoY).

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  • Indonesia's P/E Ratio Relatively Low Compared to Regional Economies

    PE Ratio Indonesia Stock Exchange Indonesia Investments

    Indonesian newspaper Investor Daily reported that stocks at the Indonesia Stock Exchange are still relatively cheap compared to regional stock indices. Currently, the price to earnings ratio (P/E ratio) of Indonesia's main index is about 18. In contrast, South Korea's Kospi index amounts to 34, Japan's Nikkei 28, Taiwan's Taiex 23, and Philippines' PSE stands at 23 times earnings. As the Indonesian economy as well as its companies' profit figures are projected to grow, the P/E is expected to fall to 16 this year.

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  • Indonesia's March 2013 Inflation Rate Rises Mainly Due to Increased Food Prices

    Today, Statistics Indonesia (Badan Pusat Statistik, abbreviated BPS) released Indonesia's inflation figures for the month March 2013. According to Suryamin, head of BPS, the country's inflation last month reached the level of 0.63 percent, the highest March inflation level in five years. Particularly food prices drove the inflation rate upwards. Year-on-year inflation now stands at 5.90 percent, while year-to-date inflation (January-March) is 2.41 percent.

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Latest Columns Inflation

  • Indonesian Rupiah & Stocks: Down on Economic Data and Greece

    Indonesian Rupiah & Stocks: Down on Economic Data and Greece

    Indonesia’s benchmark stock index (Jakarta Composite Index) fell 0.43 percent to 5,220.00 points on Monday (05/01) amid profit taking on a relatively quiet trading day on the Indonesia Stock Exchange. Meanwhile, the Indonesian rupiah exchange rate depreciated 0.55 percent to IDR 12,614 per US dollar according to the Bloomberg Dollar Index as concerns about Greece exiting the euro intensified and boosted US dollar demand. Moreover, market participants were still reacting to Indonesia’s latest trade and inflation data.

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  • Analysis of Indonesia’s Dec Inflation and Nov Trade Balance

    Analysis of Indonesia’s Dec Inflation and Nov Trade Balance

    Indonesia’s inflation pace accelerated in December 2014, exceeding estimations of analysts and Indonesia’s central bank. December inflation, 2.46 percent (m/m) or 8.36 percent (y/y), accelerated due to the impact of higher subsidized fuel prices (introduced in November) and volatile food prices (fluctuating rice and chili prices at the year-end). Other factors that contributed to high inflation in 2014 were higher electricity tariffs for households and industries, the higher price of 12 kg LPG, and an airfare adjustment.

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  • Update Indonesian Economy: Inflation, Trade Balance & Manufacturing

    Indonesia’s inflation reached 2.46 percent month-to-month (m/m) in December 2014 due to the impact of higher subsidized fuel prices implemented on 18 November 2014. On a year-on-year (y/y) basis, Indonesia’s inflation was recorded at 8.36 percent, slightly lower than the result in 2013 (8.38 percent). Inflation has been high in 2013 and 2014 as the Indonesian government raised prices of subsidized fuels in both years in an attempt to relieve fiscal pressures brought about by costly oil imports.

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  • Prudent Fiscal Management; IMF Positive about Indonesian Economy

    Prudent Fiscal Management; IMF Positive about Indonesian Economy

    A team of the International Monetary Fund (IMF), led by David Cowen (advisor at the IMF’s Asia and Pacific Department), visited several Indonesian cities in the first three weeks of December 2014 to conduct research on the economic fundamentals of Southeast Asia’s largest economy. This research included the study of recent macroeconomic developments as well as the formulation of prognosis scenarios for the short and middle term. The IMF team held discussions with the government, Bank Indonesia, private entrepreneurs and scholars.

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  • Fitch Ratings Keeps Indonesia’s Sovereign Rating at BBB-/Stable

    International credit rating agency Fitch Ratings maintained Indonesia’s sovereign rating at BBB-/stable outlook (investment grade). Baradita Katoppo, President Director of Indonesia’s Fitch Ratings branch, said that the firm is positive about the country’s financial fundamentals and prudent fiscal policy as the central bank has showed to prefer stability over growth, resulting in slowing credit growth and rising foreign exchange reserves in Southeast Asia’s largest economy. Economic growth is expected to fall to 5.1 percent (y/y) in 2014.

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  • Bank Indonesia about Inflation and the Current Account Deficit

    Bank Indonesia about Inflation and the Current Account Deficit

    The central bank of Indonesia expects that Indonesia’s current account deficit will decline to below the three percent of gross domestic product (GDP) mark by the end of this year supported by sharply falling global oil prices and Indonesia’s recent subsidized fuel price hike. Hendar, Deputy Governor of the central bank, said that for every USD $1 decline in global oil prices, the country’s current account deficit narrows by about USD $170 million. Indonesia’s current account deficit fell to 3.1 percent of GDP in Q3-2014 (from 4.06 percent of GDP in Q2-2014).

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  • Macroeconomic Stability Indonesia: Inflation and GDP Update

    The Governor of Indonesia’s central bank, Agus Martowardojo, said that he expects inflation to accelerate to 6.1 percent year-on-year (y/y) in November 2014, significantly up from 4.83 percent y/y in the previous month. Accelerated inflation is caused by the multiplier effect triggered by the recent subsidized fuel price hike in Southeast Asia’s largest economy. On 18 November 2014, the government introduced higher prices for subsidized fuels in a bid to reallocate public spending from fuel consumption to structural development.

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  • What are Joko Widodo's Economic & Social Development Targets?

    Last week, Indonesian President Joko Widodo introduced higher subsidized fuel prices in Southeast Asia’s largest economy in a bid to shift generous public spending from fuel consumption to productive and structural economic and social development. Prices of subsidized low-octane gasoline (premium) and diesel (solar) were raised by over 30 percent, or IDR 2,000 (USD $0.17) per liter, starting from 00:00 on Tuesday (18/11). Widodo aims to reallocate these funds to infrastructure, social welfare and the maritime sector.

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  • Impact of Higher Subsidized Fuel Prices on Indonesia’s Car Industry

    Impact of Higher Subsidized Fuel Prices on Indonesia’s Car Industry

    After Indonesian President Joko Widodo and Vice President Jusuf Kalla have confirmed that prices of subsidized fuels (gasoline and diesel) will be raised in November 2014 in an attempt to ease the country’s wide current account deficit and government budget deficit (which are primarily caused by costly oil imports), domestic car manufacturers and dealers are expected to post declining earnings in 2015. Besides the subsidized fuel price issue, Indonesia’s car industry is also negatively impacted by the country’s slowing economic growth.

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  • What are the Economic Challenges Faced by President Joko Widodo?

    What are the Economic Challenges Faced by President Joko Widodo?

    Today (20/10), Central Jakarta seems to have changed into one big party as Joko Widodo was inaugurated as Indonesia’s seventh president earlier this morning. For the remainder of the day celebrations will be held at Monas (National Monument) and surrounding areas. However, it is of vital importance that Widodo (popularly known as Jokowi) will start to focus on this presidential duties tomorrow as the country is facing a number of economic challenges. What are these challenges?

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