Consumer Price Index Indonesia: Further Easing Inflation in October
Indonesian inflation accelerated by a modest 0.01 percent month-on-month (m/m) in October 2017, considerably lower than the average monthly October inflation rate in recent years. Low October 2017 inflation primarily comes on the back of stable commodity prices. In fact, in terms of food prices, there actually occurred deflation in Southeast Asia's largest economy.
Based on data from Indonesia's Statistics Agency (BPS), the volatile food group recorded deflation of 0.53 percent (m/m), hence extending last month's deflation of 0.67 percent (m/m) as food prices are still recovering after the Ramadan and Idul Fitri festivities. Lower food prices were mainly caused by easing prices of chicken meat, shallots, onion, eggs, and cayenne pepper. Also on a year-on-year (y/y) basis, food inflation is remarkably low for Indonesian standards, touching only 0.19 percent (y/y) in October.
Another reason that explains low overall inflation in Indonesia is controlled administered prices. This group recorded deflation of 0.01 percent (m/m) in October, slowing down from a pace of 0.15 percent (m/m) in the preceding month. Deflation of administered prices is primarily attributed to decreasing airfares. Annually, inflation of administered prices has now reached 8.68 percent (y/y), a high figure due to the government's electricity tariff reform program.
Indonesian core inflation fell to 0.17 percent (m/m) in October, down from 0.35 percent (m/m) in September 2017. On an annual basis, Indonesian core inflation in October was recorded at 3.07 percent (y/y).
Indonesia's annual inflation rate has now eased for a fourth-consecutive month in October 2017, touching its lowest level since January. Indonesian headline inflation eased to 3.58 percent (y/y) in October, compared with 3.72 percent (y/y) in the preceding month.
Inflation in 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% | |
| December | 0.55% | 2.46% | 0.96% | 0.42% | |
| Total | 8.38% | 8.36% | 3.35% | 3.02% | 2.67% |
Source: Statistics Indonesia (BPS)
Inflation in Indonesia and Central Bank (BI) Target 2008-2016:
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
| Inflation (annual % change) |
9.8 | 4.8 | 5.1 | 5.4 | 4.3 | 8.4 | 8.4 | 3.4 | 3.0 |
| BI Target (annual % change) |
5.0 | 4.5 | 5.0 | 5.0 | 4.5 | 4.5 | 4.5 | 4.0 | 4.0 |
Source: Bank Indonesia