Consumer Price Index; After 3 Straight Months of Deflation, October 2020 Brings Mild Inflation
In line with expectations, October 2020 brought mild inflation to Indonesia, thereby allowing the country’s consumer price index (CPI) to rebound after experiencing an unprecedented three consecutive months of deflation (July-September 2020).
Not only did Indonesia enter a ‘low inflation era’ (starting from 2015), but also the ongoing COVID-19 crisis – which is likely to push Indonesia into a recession in Q3-2020 – has cut demand in an unprecedented way, while also undermining people’s purchasing power as millions of people have been fired or saw their monthly wage being cut. Low core inflation (+0.04 percent month-on-month in October 2020), which excludes volatile food prices and government-administered prices, is also an indication that people’s purchasing power is under pressure. However, it should also be emphasized that many people simply refrain from spending and keep money at bank accounts (and the social and business restrictions also make it hard to spend).
However, Indonesia’s annual headline inflation rate did accelerate (very modestly) to 1.44 percent year-on-year (y/y) in October 2020 (which is still quite far below the central bank/Bank Indonesia’s inflation target range of 2.0 - 4.0 percent y/y).
Read the full article in our October 2020 (2nd half) report. This report can be ordered by sending an email to info@indonesia-investments.com or a message to +62.8788.410.6944 (including WhatsApp).
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