Inflation Update Indonesia: Low Inflation or Deflation Expected in March 2014
Statistics Indonesia (BPS) expects inflation in March 2014 to be kept below the one percent mark due to the arrival of the harvest season. Prices of several commodities, including rice, beef, chicken meet and chili, are expected to ease. In fact, BPS official Sasmito Hadi Wibowo stated that there is a chance on deflation in March 2014. Historically, Indonesia's inflation in March and April tends to be low, particularly in the latter as the harvest season reaches its peak. In 2013, Indonesia recorded inflation at 0.63 percent in March.
Wibowo also confirmed that - if subsidized fuel prices are not raised this year - the government of Indonesia can meet its inflation target, which is set at 5.5 percent in the 2014 State Budget. However, if the government decides to increase these prices, inflation can accelerate to 8 percent by the year-end. After the subsidized fuel price hike in June 2013, inflation rose rapidly and ended at 8.4 percent in December 2013.
Low inflation is also important in the context of poverty eradication. The government aims to curb the nation's poverty rate to 10.5 percent at the year-end. This target can be met if inflation is kept around 5.5 percent in 2014. The country's gross domestic product (GDP) growth is estimated at 5.7 percent, slightly lower than last year's result.
Inflation in Indonesia:
| Month | Monthly Growth 2013 |
Monthly Growth 2014 |
| January | 1.03% | 1.07% |
| February | 0.75% | 0.26% |
| March | 0.63% | |
| April | -0.10% | |
| May | -0.03% | |
| June | 1.03% | |
| July | 3.29% | |
| August | 1.12% | |
| September | -0.35% | |
| October | 0.09% | |
| November | 0.12% | |
| December | 0.55% | |
| Total | 8.38% | 1.33% |
| 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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