Central Bank & Indonesia's Statistics Agency Expect Deflation in April 2016
The central bank of Indonesia (Bank Indonesia) expects to see deflation in April 2016 on the back of controlled food prices as the harvest season has arrived. Bank Indonesia Governor Agus Martowardojo said a central bank survey shows deflation of 0.33 percent month-to-month (m/m) during the first three weeks of April. Besides lower food prices, Martowardojo also attributes April deflation to the government's decision to cut fuel prices (premium gasoline and diesel) by IDR 500 (approx. USD $0.04) per liter per 1 April. This move led to a 4 percent drop in public transportation tariffs.
In March 2016 Indonesia's inflation rate accelerated 0.19 percent (m/m) or 4.45 percent on an annual basis primarily on higher food prices. Sasmito Hadi Wibowo, Deputy of Distribution and Services Statistics at the country's statistics agency (BPS), agrees with Martowardojo. Wibowo also expects to see deflation in April on controlled food prices and lower energy tariffs (fuel and electricity).
After April, inflationary pressures are expected to rise as the harvest season ends in May while price pressures related to the Ramadan month and Idul Fitri celebrations start to increase. During these Islamic celebrations consumer spending on food products, shoes, clothes, etc. grows hence triggering inflationary pressures. Governor Martowardojo said it is important that the central government will carefully monitor potential price swings ahead of the Ramadan month in order to avert suddenly jumping prices (this can be averted by timely additional imports to stabilize food prices).
Read more: Premium Gasoline & Diesel Fuel Prices in Indonesia Cut per 1 April
Indonesian inflation has two traditional peaks: (1) June-August due to Ramadan, Idul Fitri and the new school year, and (2) December-January due to Christmas and New Year celebrations.
Indonesia's central bank maintains its inflation target in the range of 3-5 percent (y/y) in 2016.
Inflation in Indonesia:
| Month | Monthly Growth 2013 |
Monthly Growth 2014 |
Monthly Growth 2015 |
Monthly Growth 2016 |
| January | 1.03% | 1.07% | -0.24% | 0.51% |
| February | 0.75% | 0.26% | -0.36% | -0.09% |
| March | 0.63% | 0.08% | 0.17% | 0.19% |
| April | -0.10% | -0.02% | 0.36% | |
| May | -0.03% | 0.16% | 0.50% | |
| June | 1.03% | 0.43% | 0.54% | |
| July | 3.29% | 0.93% | 0.93% | |
| August | 1.12% | 0.47% | 0.39% | |
| September | -0.35% | 0.27% | -0.05% | |
| October | 0.09% | 0.47% | -0.08% | |
| November | 0.12% | 1.50% | 0.21% | |
| December | 0.55% | 2.46% | 0.96% | |
| Total | 8.38% | 8.36% | 3.35% |
Source: Statistics Indonesia (BPS)
Inflation in Indonesia and Central Bank Target 2008-2015:
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| Inflation (annual percent change) |
9.8 | 4.8 | 5.1 | 5.4 | 4.3 | 8.4 | 8.4 | 3.4 |
| Bank Indonesia Target (annual percent change) |
5.0 | 4.5 | 5.0 | 5.0 | 4.5 | 4.5 | 4.5 | 4.0 |
Sources: Statistics Indonesia and Bank Indonesia
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