Agus Martowardojo: Indonesia's July 2014 Inflation Outpaces July Average
Bank Indonesia Governor Agus Martowardojo expects the country’s July 2014 inflation pace to come in the range of 0.80 to 1.20 percent (month-to-month). This relatively high inflation figure is caused by seasonal factors: the holy fasting month of Ramadan and Idul Fitri celebrations. Ahead and during these festivities, consumers tend to spend more, thus resulting in higher prices in the context of these Islamic celebrations. A recent Bank Indonesia survey showed that inflation already reached 0.80 percent in the first week of July.
In the past five years, the average inflation figure in the month of July has been 0.85 percent month-to-month, or 4.5 percent year-on-year. As such, July 2014 inflation will be higher than the (recent) historic average. This is caused by higher electricity tariffs introduced at the start of July. Another seasonal factor that contributes to July inflation is the start of the new school year. However, the central bank still targets an inflation figure of between 3.5 and 5.5 percent for full year 2014.
Traditionally, Indonesian inflation accelerates significantly in the month of Ramadan and slows again in August (unless administered price adjustments are made by the government as happened in 2013 when high inflation was recorded in August due to the impact of the fuel price hike in June 2013). The other traditional peak in Indonesian inflation occurs in December and January due to Christmas and New Year celebrations.
Martowardojo said that other inflationary pressures can be caused by the looming El Nino weather cycle in the second half of 2014 and the volatile rupiah/US dollar exchange rate. According to the central bank governor, the key to safeguard a healthy inflation figure amid these conditions is securing sufficient domestic food supplies.
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% | |
| August | 1.12% | |
| September | -0.35% | |
| October | 0.09% | |
| November | 0.12% | |
| December | 0.55% | |
| Total | 8.38% | 1.99% |
| Inflation Rate June 2014 |
Inflation Rate Calender 2014 |
Inflation Rate year-on-year |
|
| General | 0.43 | 1.99 | 6.70 |
| - Core | 0.25 | 1.88 | 4.81 |
| - Administered Price | 0.45 | 2.37 | 13.47 |
| - Volatile | 1.06 | 2.22 | 6.74 |
| 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