Consumer Price Index of Indonesia: Easing Food and Transportation Prices Bring Deflation in May 2024
Inflation in Indonesia was lower than expected in May 2024. In fact, the latest data from Indonesia’s Statistical Office (Badan Pusat Statistik, or BPS) show a contraction in overall prices (in other words: deflation). With an annual headline inflation rate of 2.84 percent, it means price pressures remain under control in Indonesia.
What caused the -0.03 percent month-on-month (m/m) deflation rate in May 2024? Well, there are two clear factors. Firstly, the food, drinks and tobacco expenditure group showed deflation of -0.29 percent (m/m) in May 2024. This certainly is not a surprise as we typically see deflation in this group in the month after Idul Fitri. After the Idul Fitri celebrations consumers tend to refocus on saving their money rather than spending it on food and other consumer goods (such as clothes).
Moreover, May 2024 still enjoyed the impact of the harvest season. This particularly had a positive impact on prices of rice (which contracted by 0.15 percent m/m). But amid lower demand in society after Idul Fitri, chicken meat and fresh fish prices also fell, as did prices of tomatoes, potatoes and green chili peppers (cabai rawit).
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