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Today's Headlines Inflation

  • Inflation in Indonesia: June's Inflation Rate Accelerates to 1.03%

    Indonesia's June inflation rate was recorded at 1.03%. Components that contributed most to this increase were food (including instant foods), drinks, tobacco and housing (gas, water and electricity). The government's decision to raise the price of subsidized fuel last month already made an impact but it is expected that this impact will be heavier in the months ahead when more prices are revised upwards. On 22 June, prices of subsidized gasoline were raised by 44%, while prices of subsidized diesel were raised by 22%.

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  • Inflation in Indonesia May Exceed One Percent in June and Peak in July

    Indonesia's inflation rate is expected to exceed one percent in June 2013 as a result of the increase in price of subsidized fuel that was implemented last week. Throughout Indonesian society, prices have been revised upward to cover for the increased fuel costs. These first round effects may still be felt in July, when inflation is expected to peak at two percent as the fasting month (Ramadhan) and the new school season will start. Second round effects may continue for another five months.

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  • Indonesia's Fuel Subsidy Policy: New Fuel Prices Effective from Saturday

    Both Industry minister M.S. Hidayat and Economic minister Hatta Rajasa confirmed that on Friday (21/06) the government will announce the increase in price of subsidized fuel after it had already been approved by the House of Representatives (DPR) last Monday (17/06). Immediately after the announcement, the price of fuel is set to be raised. It has been reported that the government's announcement will be revealed at midnight, implying that the price hike is effective starting from Saturday.

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  • New Macroeconomic Assumptions in Indonesia's Revised State Budget

    DPR MPR Building Government of Indonesia Investments

    After a long plenary session on Monday (17/06), Indonesia's House of Representatives (DPR) and the government have agreed to the revised 2013 State Budget (APBN-P). The revision was needed as original macroeconomic assumptions began to fall out of tune with reality. Due to global and domestic conditions a number of assumptions needed to revised down. Most controversial decision that was taken is the increase in price of subsidized fuel by 44 percent to IDR 6,500 (USD $0.66) per liter.

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  • Indonesia's House of Representatives Approves Price Hike Subsidized Fuel

    Fuel Subsidy Indonesia Investments

    Late on Monday evening (17/06), the increase in the price of subsidized fuel, as stated in Law No. 19/2012, was approved by Indonesia's House of Representatives (DPR) through a voting session as political parties could not agree collectively on the price hike as well as on cash programs for the poor to mitigate effects of the higher fuel price. Demonstrations against the price hike were staged in various regions. In Medan (North Sumatra), Jambi (Central Sumatra) and Ternate (North Moluccas), it led to clashes between the police force and protestors.

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  • No Decision Yet on Price Increase Indonesia's Subsidized Fuel

    Fuel Increase Indonesia June 2013 Indonesia Investments

    The plenary session of Indonesia's House of Representatives (DPR) is still ongoing as the various political parties could not agree yet on the increase in the price of subsidized fuel. Five political parties agree to the price hike, while four others have rejected it. If the political parties can not agree to the proposal, then it will be decided by individual voting starting from midnight (Indonesian time). The price hike has been long awaited as a measure to relieve pressure on Indonesia's budget deficit.

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  • Indonesian Government Announces Subsidized Fuel Price Hike on Monday

    Indonesia's Subsidized Fuel 17 June 2013 - Indonesia Investments

    Today (15/06), it was reported in Indonesia's media that the government will announce details regarding the new price of subsidized fuel on Monday (17/06) after a plenary session of the House of Representatives (DPR). The Union of Indonesian Workers (Konfederasi Serikat Pekerja Seluruh Indonesia) has announced that it will stage a large demonstration on 17 or 18 June at the DPR/MPR building (the seat of the government) in Indonesia's capital city as well as smaller demonstrations in various cities across the archipelago.

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  • Bank Indonesia Raises its Interest Rate to 6.0% to Support the Rupiah

    Bank Indonesia - BI - Interest Rate Increase 6% - Indonesia Investments

    The central bank of Indonesia (Bank Indonesia) decided today to raise its benchmark interest rate by 25 basis points to 6.0 percent. The decision was made amid concerns about the inflationary impact of a hike in subsidized fuel prices (planned this June) as well as increasing uncertainty in global financial markets as central banks' may scale back stimulus programs. The Indonesian rupiah has weakened considerably in 2013 and forms the worst performer in Asia after the Japanese yen among the 11 most-traded currencies tracked by Bloomberg.

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  • Central Bank Uses Foreign Exchange Reserves to Support the Rupiah

    To ease pressures on the IDR rupiah, Indonesia's central bank has used about USD $2.0 billion of its foreign exchange reserves to support the currency as the country's continuing trade deficit as well as concerns about the possible increase in price of subsidized fuel in June has caused much uncertainty about the level of inflation in the near future and puts downward pressure on the rupiah. Indonesia's foreign exchange reserves fell to USD $105.2 billion in late May 2013 from USD $107.3 billion at the end of April.

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  • Rajasa: Indonesian Government Targets GDP Growth of 6.2% in Q2-2013

    Rajasa: Indonesian Government Targets GDP Growth of 6.2% in Q2-2013

    Indonesia's minister of Economy, Ir. M. Hatta Rajasa, stated that the government of Indonesia intends to realize economic growth of at least 6.2 percent in the second quarter of 2013 in order to remain on track for 6.3 percent growth for full year 2013. Although he reminded that it will take hard effort to realize this target, his message contained more optimism than Finance minister Chatib Basri's statement earlier this week who sees 6.0 percent of economic growth as the limit in Q2-2013.

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Latest Columns Inflation

  • Bank Indonesia Staying Behind the Curve; Leaves Interest Rates Unchanged at Policy Meeting

    Bank Indonesia Staying Behind the Curve; Leaves Interest Rates Unchanged at Policy Meeting

    We were surprised to learn that Indonesia’s central bank (Bank Indonesia) decided to leave its interest rates unchanged at the two-day monetary policy meeting on 23-24 May 2022. The benchmark BI 7-Day Reverse Repo Rate was kept at 3.50 percent, while the deposit facility and lending facility rates were maintained at 2.75 percent and 4.25 percent, respectively. We had expected Bank Indonesia to raise its key rate by 0.25 percent to 3.75 percent at this occasion.

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  • Subscriber Update - Bank Indonesia Goes for Another Interest Rate Cut

    Subscriber Update - Bank Indonesia Goes for Another Interest Rate Cut

    It came as a big surprise to us when the central bank of Indonesia (Bank Indonesia) announced on 19 November 2020 (the day it concluded its two-day monetary policy meeting) that it decided to cut its benchmark interest rate (the seven-day reverse repo rate) by 25 basis points to 3.75 percent. Bank Indonesia also cut its deposit facility and lending facility rates by 25 basis points to 3.00 percent and 4.50 percent, respectively.

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  • Consumer Price Index Update: Easing Inflationary Pressures in June

    Consumer Price Index Update: Easing Inflationary Pressures in June

    On Monday 1 July 2019 Statistics Indonesia (BPS) released Indonesia’s latest inflation data. The data show that headline inflation in Southeast Asia’s largest economy eased to a level of 0.55 percent month-on-month (m/m) in June 2019, down from 0.68 percent (m/m) in May 2019 when price pressures peaked due to Ramadan and Lebaran celebrations. This period always gives rise to a significant boost in consumption, hence prices of foodstuffs peak. Meanwhile, people also tend to buy new clothes, bags and shoes because they want to look good at these celebrations.

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  • Indonesia's Intervention in Fuel Prices Thwarts Private Investment

    Indonesia's Intervention in Fuel Prices Thwarts Private Investment

    There is concern that the Indonesian government's plan to curb price increases of (non-subsidized) fuels in Indonesia will impact negatively on private investors' enthusiasm to invest in Indonesia's oil and gas industry. Earlier this week Arcandra Tahar, Deputy Minister at the Energy and Mineral Resources Ministry, informed that the government wants to regulate prices of fuels in order to keep inflation in check.

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  • Poverty in Indonesia: Impressive Decline per September 2017

    Poverty in Indonesia: Impressive Decline per September 2017

    The number of people who live in poverty in Indonesia fell by 1.19 million individuals, per September 2017, to 26.58 million, from 27.77 million poor people in March 2017 (Indonesia's Statistics Agency releases poverty data twice per year, covering the situation in the months March and September). This is a significant decline and therefore constitutes a very good development. In relative terms, Indonesia's poverty rate fell 0.52 percent from 10.64 percent to 10.12 percent (over the same period).

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  • More Inflation Pressures Expected to Occur in Indonesia in 2018

    More Inflation Pressures Expected to Occur in Indonesia in 2018

    Rising commodity prices are good for the Indonesian economy because the country is one of the world's biggest commodity exporters. However, rising commodity prices will also make it more difficult for the government to keep inflation within its target range of 2.5 - 4.5 percent year-on-year (y/y) in 2018.

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  • Bank Indonesia: Low & Stable Inflation Positive for the Economy

    Bank Indonesia: Low & Stable Inflation Positive for the Economy

    Bank Indonesia is content seeing Indonesia's inflation pace at a rather mild rate of 0.22 percent month-on-month (m/m) in July 2017. Dody Budi Waluyo, Executive Director of Economic and Monetary Policy at the central bank, said low and stable inflation is a positive asset for the economy as it supports the rupiah exchange rate as well as the investment climate and safeguards people's purchasing power.

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  • Bank Indonesia Keeps Key Interest Rate at 4.75% in May 2017, Analysis

    Bank Indonesia Keeps Key Interest Rate at 4.75% in May 2017, Analysis

    The central bank of Indonesia (Bank Indonesia) maintained its benchmark interest rate - the 7-day reverse repurchase rate - at 4.75 percent at the policy meeting on 17-18 May 2017, a decision that is in line with analysts' forecasts. Bank Indonesia said the decision is consistent with its efforts to maintain macroeconomic and financial system stability "by driving the domestic economic recovery process", while continue to monitor external threats stemming from US policy directions and geopolitical conditions, specifically in the Korea Peninsula, as well as domestic threats stemming from inflationary pressures and ongoing consolidation in the banking and corporate sectors.

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