Consumer Price Index: June 2024 Brings the Second Consecutive Month of Deflation to Indonesia
Again, and in contrast to our expectations, Indonesia’s consumer price index showed deflation. After 0.03 percent month-on-month (m/m) of deflation in May 2024, the latest data from Indonesia’s Statistical Office (Badan Pusat Statistik, or BPS) show a 0.08 percent (m/m) deflation rate in June 2024.
This also means that the annual headline inflation rate of Indonesia eased from 2.84 percent year-on-year (y/y) in May 2024 to 2.51 percent (y/y) in June 2024, implying that price pressures are relatively modest in Indonesia and remained well within the central bank’s target range of 1.5–3.5 percent (y/y) for full-2024.
Looking at the latest BPS data, there is simply one factor that caused overall deflation for Indonesia in June 2024, and that is easing food prices. As a direct consequence of declining prices of onions, tomatoes, chicken meat, chicken eggs and garlic, the BPS data show that the ‘food, drinks, and tobacco’ expenditure group contracted by 0.49 percent (m/m). Low food prices come in the aftermath of the harvest season and the somewhat ‘low-demand season’ after the Idul Fitri celebrations finished in April.
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