Normally, April tends to bring deflation to Southeast Asia’s largest economy as the harvest season reaches its peak (particularly due to the peak in rice production). This year, however, Bank Indonesia Governor Agus Martowardojo sees inflationary pressures brought about by higher transportation costs in April. The governor emphasized that the central bank will make efforts to curb price hikes ahead of the holy fasting month of Ramadan (when prices usually rise significantly due to high consumer demand).

Bank Indonesia expects to see relatively high inflation in April despite the government having announced to leave prices of low-gasoline fuel (premium) and subsidized diesel unchanged (or only slightly changed) for May 2015. Since the start of 2015 - when the government basically abolished its decade-old fuel subsidy system - the government sets these prices per month (based on Mean of Platts Singapore “MOPS” benchmark). However, the government still provides an IDR 1,000 per liter subsidy for diesel.

Inflation in Indonesia:

Month  Monthly Growth
          2013
 Monthly Growth
          2014
 Monthly Growth
          2015
January          1.03%          1.07%         -0.24%
February          0.75%          0.26%         -0.36%
March          0.63%          0.08%          0.17%
April         -0.10%         -0.02%
May         -0.03%          0.16%
June          1.03%          0.43%
July          3.29%          0.93%
August          1.12%          0.47%
September         -0.35%          0.27%
October          0.09%          0.47%
November          0.12%          1.50%
December          0.55%          2.46%
Total          8.38%          8.36%         -0.44%

Source: Statistics Indonesia (BPS)

Inflation in Indonesia 2008-2014:

     2008    2009    2010    2011    2012    2013    2014
Inflation
(annual percent change)
    9.8     4.8     5.1     5.4     4.3     8.4     8.4

Source: World Bank

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