Consumer Price Index Indonesia: Another Month of Higher-than-Expected Inflation
Based on the latest data from Indonesia’s Central Statistics Agency (BPS), the nation’s annual headline inflation rate increased 3.23 percent year-on-year (y/y) in November 2018. The result is higher than we had anticipated and also implies that Indonesia’s consumer price index has now accelerated for a second straight month.
Higher-than-expected inflation causes some optimism that there has been an improvement in household consumption in Southeast Asia’s largest economy. If there has indeed been an improvement, it would be great good news for the whole economy as household consumption accounts for around 55 percent of Indonesia’s gross domestic product (GDP).
Moreover, Indonesia’s core inflation – which excludes movements in administered prices and volatile food prices – rose from 2.97 percent (y/y) in October to 3.03 percent (y/y) in November. Accelerating core inflation is usually considered a sign of strengthening consumption.
Meanwhile, on a monthly basis, Indonesia’s consumer price index (CPI) increased 0.27 percent (m/m) in November 2018. What is rather remarkable is that Indonesia’s November inflation is slightly lower than October inflation this year (last month the CPI index rose 0.28 percent m/m). Traditionally, monthly November inflation is markedly higher than October inflation in Indonesia as consumption rises ahead of the Christmas and New Year celebrations. However, for the first time in many years it is the other way around in 2018.
Indonesia's November 2018 Inflation per Expenditure Group:
• Foodstuffs; +0.24 percent (m/m)
• Processed food, beverages, cigarette and tobacco; +0.20 percent (m/m)
• Housing, water, electricity, gas and fuel; +0.25 percent (m/m)
• Clothing; +0.23 percent (m/m)
• Health; +0.36 percent (m/m)
• Education, recreation and sports; +0.05 percent (m/m)
• Transportation, communication and financial services; +0.56 percent (m/m).
Inflation in Indonesia:
| Month | M/M Growth 2018 |
| January | 0.62% |
| February | 0.17% |
| March | 0.20% |
| April | 0.10% |
| May | 0.21% |
| June | 0.59% |
| July | 0.28% |
| August | -0.05% |
| September | -0.18% |
| October | 0.28% |
| November | 0.27% |
| Year-to-Date | 2.50% |
Headline Consumer Price Index of Indonesia:
| Month | M/M Growth 2013 |
M/M Growth 2014 |
M/M Growth 2015 |
M/M Growth 2016 |
M/M Growth 2017 |
| January | 1.03% | 1.07% | -0.24% | 0.51% | 0.97% |
| February | 0.75% | 0.26% | -0.36% | -0.09% | 0.23% |
| March | 0.63% | 0.08% | 0.17% | 0.19% | -0.02% |
| April | -0.10% | -0.02% | 0.36% | -0.45% | 0.09% |
| May | -0.03% | 0.16% | 0.50% | 0.24% | 0.39% |
| June | 1.03% | 0.43% | 0.54% | 0.66% | 0.69% |
| July | 3.29% | 0.93% | 0.93% | 0.69% | 0.22% |
| August | 1.12% | 0.47% | 0.39% | -0.02% | -0.07% |
| September | -0.35% | 0.27% | -0.05% | 0.22% | 0.13% |
| October | 0.09% | 0.47% | -0.08% | 0.14% | 0.01% |
| November | 0.12% | 1.50% | 0.21% | 0.47% | 0.20% |
| December | 0.55% | 2.46% | 0.96% | 0.42% | 0.71% |
| Total | 8.38% | 8.36% | 3.35% | 3.02% | 3.61% |
Source: Statistics Indonesia (BPS)
Inflation in Indonesia and Central Bank (BI) Target:
| 2014 | 2015 | 2016 | 2017 | 2018 | |
| Inflation (annual % change) |
8.4 | 3.4 | 3.0 | 3.6 | |
| BI Target (annual % change) |
4.5 | 4.0 | 4.0 | 4.0 | 3.5 |
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | |
| Inflation (annual % change) |
9.8 | 4.8 | 5.1 | 5.4 | 4.3 | 8.4 |
| BI Target (annual % change) |
5.0 | 4.5 | 5.0 | 5.0 | 4.5 | 4.5 |
Source: Bank Indonesia
Inflation in Indonesia by Component:
| November 2018 M/M |
November 2018 Y/Y |
November 2018 YTD |
|
| General | 0.27% | 3.23% | 2.50% |
| Core | 0.22% | 3.03% | 2.90% |
| Government Administered | 0.52% | 3.07% | 2.13% |
| Volatile | 0.23% | 4.32% | 1.81% |
| Energy | 0.28% | 3.28% | 2.91% |
Source: BPS
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Read the full article in the November 2018 edition of our monthly research report. You can purchase this report by sending an email to info@indonesia-investments.com or a WhatsApp (WA) message to the following number: +62.(0).8788.410.6944
Poll Indonesia Investments:
Where do you think the rupiah will be at the end of 2018?
Voting possible: -
Results
- Above IDR 15,000 per US dollar (45.7%)
- IDR 14,500 - 15,000 per US dollar (26.3%)
- IDR 14,000 - 14,500 per US dollar (12.8%)
- IDR 13,500 - 14,000 per US dollar (5.8%)
- Below IDR 13,500 per US dollar (5%)
- No opinion (4.3%)
Total amount of votes: 600