Inflation in Indonesia: Easing Inflation Trend Continues in August 2014
The latest Bank Indonesia survey on the topic of inflation suggests that Indonesia’s inflation pace in August 2014 is still relatively safe. Based on the survey, which monitored inflation in Southeast Asia’s largest economy up to the third week of the month and which usually forms a good indicator for the inflation figure at the month-end, Indonesian inflation in August will be lower than the 0.93 percentage point (month-to-month) of inflation recorded in the previous month. Inflation in Indonesia always shows a peak around in the period June to August.
Inflation in Indonesia is traditionally high in the months June, July and August due to seasonal factors. The Muslim celebrations of Ramadan and Idul Fitri always trigger increased consumption among an expanding middle class. Moreover, families increase household spending ahead of the start of the new school year. In the month of August these inflationary pressures tend to ease and it is not uncommon to see deflation in September.
August inflation is expected to be in the range of 0.30 to 0.45 percent (month-to-month). There may still be some inflationary pressures caused by the higher electricity tariffs (which were introduced in May 2014). Food products, however, are expected to show deflation in this month.
On a year-on-year basis, inflation eased to 4.53 percent in July 2014 (finally falling within the target range of Indonesia’s central bank) after having been high since the Indonesian government raised prices of subsidized fuels in June 2013. Meanwhile, calendar year inflation (January-July 2014) has risen to 2.94 percent. In August 2013 inflation reached 1.12 percent (month-to-month) as it was still impacted by the higher subsidized fuel tariffs. Therefore, the year-on-year inflation figure (4.53 percent in July 2014) is also expected to decline.
Inflation in Indonesia:
| Month | Monthly Growth 2013 |
Monthly Growth 2014 |
| January | 1.03% | 1.07% |
| February | 0.75% | 0.26% |
| March | 0.63% | 0.08% |
| April | -0.10% | -0.02% |
| May | -0.03% | 0.16% |
| June | 1.03% | 0.43% |
| July | 3.29% | 0.93% |
| August | 1.12% | |
| September | -0.35% | |
| October | 0.09% | |
| November | 0.12% | |
| December | 0.55% | |
| Total | 8.38% | 2.94% |
| Inflation Rate July 2014 |
Inflation Rate Calender 2014 |
Inflation Rate year-on-year |
|
| General | 0.93 | 2.94 | 4.53 |
| - Core | 0.52 | 2.40 | 4.64 |
| - Administered Price | 1.32 | 3.72 | 6.18 |
| - Volatile | 2.00 | 4.26 | 2.63 |
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | |
| Inflation (annual percent change) |
9.8 | 4.8 | 5.1 | 5.4 | 4.3 | 8.4 |
Source: Statistics Indonesia
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