Consumer Price Index Indonesia: Inflation at 0.21% in May 2018
Indonesian inflation was slightly below estimates at 0.21 percent month-on-month (m/m) in May 2018 because food price increases were modest amid the Islamic fasting month (Ramadan), a period when consumption (hence demand for food) tends to rise. Although the Muslim community fasts during daytime, in the morning and evening many food parties are organized and therefore, overall, consumption rises during Ramadan and the subsequent Eid al-Fitr celebrations.
Calendar-year inflation accelerated to 1.30 percent in the January-May 2018 period. Meanwhile, Indonesia's annual headline inflation eased to 3.23 percent (y/y) in May 2018 from 3.41 percent in the preceding month. This means that inflation remains comfortably within the central bank's target range of 2.5 - 4.5 percent (y/y) that was set for full-year 2018.
Low inflation during Ramadan brings a mixed picture: on the one hand authorities can be relieved that inflationary pressures are under control despite rising crude oil prices, rupiah weakness and Ramadan-related consumption. On the other hand low inflation can also be caused by structurally subdued purchasing power of the Indonesian people. One of the reasons why Indonesia's economic growth has been stuck around the 5 percent (y/y) level is subdued household consumption (that has fallen below the 5 percent y/y mark).
Indonesia's May Inflation per Expenditure Group:
• Foodstuffs; +0.21 percent (m/m)
• Processed food, beverages, cigarette and tobacco; +0.31 percent (m/m)
• Housing, water, electricity, gas and fuel; +0.19 percent (m/m)
• Clothing; +0.33 percent (m/m)
• Health; +0.21 percent (m/m)
• Education, recreation and sports; +0.09 percent (m/m)
• Transportation, communication and financial services; +0.18 percent (m/m).
Read also: Analysis of Inflation in Indonesia
Meanwhile, Indonesia's annual core inflation rate, which excludes government-administered prices and volatile food prices, rose from 2.69 percent (y/y) in April to 2.75 percent (y/y) in May. This was partly attributed to rupiah weakness.
Inflation in Indonesia:
| Month | M/M Growth 2018 |
| January | 0.62% |
| February | 0.17% |
| March | 0.20% |
| April | 0.10% |
| May | 0.21% |
| Year-to-Date | 1.30% |
Headline Consumer Price Index of Indonesia:
| Month | M/M Growth 2013 |
M/M Growth 2014 |
M/M Growth 2015 |
M/M Growth 2016 |
M/M Growth 2017 |
| January | 1.03% | 1.07% | -0.24% | 0.51% | 0.97% |
| February | 0.75% | 0.26% | -0.36% | -0.09% | 0.23% |
| March | 0.63% | 0.08% | 0.17% | 0.19% | -0.02% |
| April | -0.10% | -0.02% | 0.36% | -0.45% | 0.09% |
| May | -0.03% | 0.16% | 0.50% | 0.24% | 0.39% |
| June | 1.03% | 0.43% | 0.54% | 0.66% | 0.69% |
| July | 3.29% | 0.93% | 0.93% | 0.69% | 0.22% |
| August | 1.12% | 0.47% | 0.39% | -0.02% | -0.07% |
| September | -0.35% | 0.27% | -0.05% | 0.22% | 0.13% |
| October | 0.09% | 0.47% | -0.08% | 0.14% | 0.01% |
| November | 0.12% | 1.50% | 0.21% | 0.47% | 0.20% |
| December | 0.55% | 2.46% | 0.96% | 0.42% | 0.71% |
| Total | 8.38% | 8.36% | 3.35% | 3.02% | 3.61% |
Source: Statistics Indonesia (BPS)
Inflation in Indonesia and Central Bank (BI) Target:
| 2014 | 2015 | 2016 | 2017 | 2018 | |
| Inflation (annual % change) |
8.4 | 3.4 | 3.0 | 3.6 | |
| BI Target (annual % change) |
4.5 | 4.0 | 4.0 | 4.0 | 3.5 |
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | |
| Inflation (annual % change) |
9.8 | 4.8 | 5.1 | 5.4 | 4.3 | 8.4 |
| BI Target (annual % change) |
5.0 | 4.5 | 5.0 | 5.0 | 4.5 | 4.5 |
Source: Bank Indonesia
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