Consumer Price Index: Indonesia Records Remarkably Low Calendar-Year Inflation in 2024
As expected, Indonesian inflation remained relatively low in December 2024, at 0.44 percent month-on-month (m/m), amid the year-end holiday season (Christmas and New Year celebrations).
What is particularly remarkable is that Indonesia recorded its lowest calendar year (headline) inflation rate in 2024 (at 1.57 percent year-on-year) since the 1997-1998 Asian Financial Crisis period.
While that may allow room for concern (as it suggests demand is low in Indonesian society, perhaps due to weak purchasing power), it is important to emphasize that Indonesia’s core inflation remains at a higher – and healthy – level (at 2.26 percent year-on-year in full-2024). Considering core inflation excludes volatile food prices and government-administered energy prices, it essentially suggests that energy and food prices have been dragging down headline inflation (see table 2).
And considering demand for food and energy tends to be stable (as people who are facing financial difficulties will first cut back on other spending budgets, like leisure and clothes before cutting back on food and energy), the data suggest that the supply of food and energy was so sufficient that it allowed prices to ease, while consumers enjoyed enough purchasing power to keep spending on non-essential matters.
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