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Today's Headlines Inflation

  • Gaikindo Targets 10% Car Sales Growth in Indonesia for 2014

    Gaikindo Targets 10% Car Sales Growth in Indonesia for 2014

    The Association of Indonesian Automotive Manufacturers (Gaikindo) expects Indonesia's car sales to increase by ten percent to 1.3 million sold vehicles for the year 2014. Growth in car sales will be particularly supported by sales in the Jakarta region, Indonesia's most densely populated area and which constitutes the country's economic and political center. In 2013, Indonesia will most likely set a new car sales record. Supported by popular low cost green car sales (LCGCs), total sales are expected to reach 1.2 million units in 2013.

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  • A Small Rebound Seen in Indonesia's Cement Consumption in October

    A Small Rebound Seen in Indonesia's Cement Consumption in October

    After experiencing slowing growth in recent months, Indonesian cement sales in October 2013 increased 7.9 percent (year-on-year) to 5.58 million metric tons according to data from the Indonesia Cement Association (ASI). As such, cement sales rebounded from the 5.3 percent growth (yoy) in the previous month. The October growth rate was mainly caused by increased cement demand from islands other than Java. In particular, demand from Sumatra rose significantly. Indonesia's second most populous island bought 1.15 million tons of cement.

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  • Agus Martowardojo Comments on Indonesia's Macroeconomy in 2014

    Agus Martowardojo Comments on Indonesia's Macroeconomy in 2014

    Agus Martowardojo, Governor of Indonesia's central bank, expects the Indonesian economy to consolidate in 2014. The country is currently experiencing an economic correction with GDP growth slowing to 5.62 percent in the third quarter of 2013. Martowardojo said that the current account deficit still needs time to reach a healthy level. Indonesia's current account deficit stood at USD $8.4 billion (equivalent to 3.8 percent of the country's GDP) in the third quarter of 2013, down from USD $9.8 billion (4.4 percent of GDP) in the second quarter.

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  • 24 Indonesian Provinces Have Set New Regional Minimum Wage for 2014

    24 Indonesian Provinces Have Set New Regional Minimum Wage for 2014

    Per 14 November 2013, 24 Indonesian provinces have confirmed their new provincial minimum wage for the year 2014. As Indonesia numbers 34 provinces in total, 10 more provinces are expected to announce their new minimum wages soon. It is interesting to note that of the 24 provinces that have already published the new minimum wage, 11 provinces have set the minimum wage below the assumed need for decent living in the province, which implies that the minimum wage is not enough to finance a person's minimum monthly basic needs.

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  • QE3 and BI Rate Concerns Impact on Indonesia's Stock Index and Rupiah

    QE3 and BI Rate Concerns Impact on Indonesia's Stock Index and Rupiah

    Concerns about the looming end of the Federal Reserve's monthly USD $85 billion stimulus program (known as quantitative easing or QE3) in combination with the deteriorating domestic economy of Indonesia has caused Indonesia's benchmark stock index (IHSG) to plunge 1.95 percent in the first trading session of 13 November 2013. The Indonesian rupiah exchange rate depreciated 0.28 percent to IDR 11,600 according to Bloomberg. These developments happen one day after the decision of Indonesia's central bank to raise the BI rate to 7.50 percent.

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  • Poverty Reduction: One of the Ambitions in Indonesia's RPJMN Plan

    Poverty Reduction: One of the Ambitions in Indonesia's RPJMN Plan

    The government of Indonesia aims to reduce the country's poverty rate to between 6.5 and 8.0 percent by 2019. The government, through its Ministry of National Development Planning (Bappenas), is currently busy finalizing the targets of the National Medium-Term Development Plan 2015-2019 (RPJMN 2015-2019). This RPJMN is the third phase of implementation of the National Long-Term Development Plan 2005-2025 (RPJPN 2005-2025) which forms the basis for ministries and government agencies when formulating their policies.

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  • Bank Indonesia Expects Indonesia's Economy to Grow 5.7% in 2013

    Agus Martowardojo, Governor of Indonesia's central bank (Bank Indonesia), stated that the country's economy is expected to grow 5.7 percent in 2013. Bank Indonesia believes GDP growth in the fourth quarter of 2013 to fall below the growth figure realized in Q3-2013 (5.62 percent). Martowardojo said that the government needs to continue measures to improve the country's exports, while trying to curtail imports of oil and gas as domestic demand for fuels remained high, even after the increase in prices of subsidized fuels in June 2013.

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  • Indonesia's Economic Growth (GDP) Continues to Slow Down in Q3-2013

    Today (06/11), Statistics Indonesia announced that Indonesia's gross domestic product (GDP) expanded 5.62 percent in the third quarter of 2013 from the same period in 2012. The result implies the continuation of Indonesia's slowing economic growth as Q3-2013 constitutes the fifth consecutive quarter in which the country recorded slowing economic growth. Previously, the government had already expressed its concern about the GDP growth figure in Q3-2013 because the current high inflation rate curbs household consumption.

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  • Indonesia Continues to Top Global Consumer Confidence Ranking

    Indonesia continues to top the ranking of countries with the highest consumer confidence in the third quarter of 2013 although its score fell four points from the second quarter to 120. According to the Nielsen Global Survey of Consumer Confidence and Spending Intentions, consumers in Indonesia are optimistic due to the general elections in mid-2014 and growth of the country's middle class. However, as inflation surged after prices of subsidized fuels were raised in June, the score fell slightly.

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  • Bank Indonesia: Inflation Showing a Continued Easing Trend in October 2013

    The central bank of Indonesia (Bank Indonesia) sees a continued easing trend in inflationary pressures in October 2013. Indonesia's inflation in October 2013 was recorded at 0.09 percent (month-to-month), thus confirming the indication that monthly inflation is back to its normal pattern in the last five years. However, the annual inflation pace is still high at 8.32 percent (yoy). Limited inflation in October was influenced by deflation of the food group component (0.80 percent mtm), although commodity prices rose (especially red chili).

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Latest Columns Inflation

  • Optimism about the Performance of the Indonesian Rupiah Rate in 2014

    Optimism about the Performance of Indonesian Rupiah Rate in 2014

    The central bank of Indonesia (Bank Indonesia) is optimistic that the country's currency will continue to appreciate against the US dollar in the first quarter of 2014. Executive Director at the Economic and Monetary Policy Department of Bank Indonesia Juda Agung said that there are two factors that impact positively on the performance of the Indonesian rupiah exchange rate: the improved global economy and strengthening domestic economic fundamentals. However, Agung declined to estimate the value of the rupiah by the end of Q1-2014.

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  • Poverty Eradication and Unemployment Reduction Below Target in Indonesia

    Poverty Eradication and Unemployment Reduction Below Target in Indonesia

    After Indonesia's outlook for economic growth in 2014 was revised down from 6 percent to between 5.8 and 6 percent, the government also revised targets of poverty and unemployment reduction. In the 2014 State Budget (APBN 2014), the government set the targeted poverty rate at 9.0 to 10.5 percent of Indonesia's total population. However, the government revised down this poverty rate to between 10.54 and 10.75 percent, which is also far below the target that was set in the National Medium Term Development Plan (RPJMN) at 8 to 10 percent.

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  • Foreign Inflows in Indonesia's Capital Markets Continue in February 2014

    Foreign confidence in Indonesia's capital markets seems to be growing further after foreign investors continued to expand their stock portfolios last week. In February 2014 (up to Friday 21/02), foreigners purchased IDR 36.0 trillion (USD $3.1 billion) worth of stocks and sold IDR 29.3 trillion (USD $2.5 billion), resulting in net foreign buying of 6.7 trillion (USD $570.2 million) in the first three weeks of February 2014. When foreign net buying of January 2014 is added, total net foreign buying reached IDR 9.0 trillion (USD $766.0 million).

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  • Macroeconomic Assumptions in Indonesia's State Budget Revised Down

    Only 50 days since the start of the fiscal year 2014 have passed and the government has already shown that it is not convinced to meet targets of basic macroeconomic assumptions set in the 2014 State Budget (APBN 2014). Therefore, the Indonesian government has lowered the outlook for all basic macroeconomic assumptions in the 2014 State Budget. On Thursday 19 February 2014, the government formally presented the downward revision of economic targets in the State Budget to the House of Representitative's Budget Agency.

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  • What about Indonesia's Domestic Consumption in 2014?

    Recently, Statistics Indonesia (BPS) released various data in the context of Indonesia's gross domestic product (GDP). Economic expansion of Southeast Asia's largest economy slowed to 5.78 percent (year-on-year) in 2013. Household consumption accounted for the largest share of Indonesia's GDP (55.8 percent) and continued to grow significantly (5.28 percent yoy) in 2013. This consumer force is one of the main reasons why many foreign companies enter and expand their businesses in Indonesia.

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  • Official Press Release of Bank Indonesia: BI Rate Kept at 7.50%

    Official Press Release of Bank Indonesia: BI Rate Kept at 7.50%

    At Bank Indonesia's Board of Governors’ Meeting today (13/02), it was decided to maintain the country's benchmark interest rate (BI rate) at 7.50 percent as well as the interest rates on the Lending Facility and Deposit Facility at 7.50 percent and 5.75 percent respectively. The policy is consistent with the tight monetary policy stance currently adopted in order to steer inflation back towards its target corridor of 4.5±1 percent in 2014 and 4±1 percent in 2015, as well as to reduce the current account deficit to a more sustainable level.

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  • Motorcycle Sales in Indonesia Fall 11% in January 2014 due to Floods

    Motorcycle Sales in Indonesia Fall 11% in January 2014 due to Floods

    Domestic sales of motorcycles in Indonesia fell 11 percent to 580,288 units in January 2014. The main reason for this decline in the first month of the year were severe floods brought about by high rainfall amid a peak of the rainy season. These weather conditions disrupted the distribution of motorcycles from factories to dealers. As a result, all motorcycle brands recorded lower sales figures according to data released by the Indonesian Motorcycle Industry Association (Aisi). However, more factors were at play.

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  • ICRA Indonesia’s Economic Review; an Update on the Macroeconomy

    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 January 2014 edition, a number of important topics 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 of the newsletter:

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  • Analysis of Indonesia's 5.78% Economic Expansion in 2013

    Analysis of Indonesia's 5.78% Economic Expansion in 2013

    On Wednesday (05/02), Statistics Indonesia (BPS) reported that the economy of Indonesia expanded 5.78 percent in 2013. This result implies that in 2013 Indonesia experienced the slowest pace of GDP growth since its 4.63 percentage growth in 2009. However, this slowing growth was basically self-inflicted as both the Indonesian government and central bank (Bank Indonesia) used various monetary and fiscal policies to curb economic expansion in order to tackle several financial issues.

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  • Inflation Update January 2014: Analysis of Indonesia's 1.07% of Inflation

    Inflation Update January 2014: Analysis of Indonesia's 1.07% of Inflation

    The pace of Indonesia's monthly January inflation rate was higher in 2014 than in the same month during the past five years. This relatively high inflation rate this year, recorded at 1.07 percent, was caused by severe rainfall and floods in several parts of Indonesia (particularly in the cities of Jakarta and Manado) amid the peak of the rainy season. These weather-related circumstances impacted on prices of food products as distribution channels were disrupted, thus giving rise to increasing prices. Annual inflation, however, slightly eased.

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