Consumer Price Index Indonesia: Inflation 0.96% in December; 3.35% in 2015
Indonesia's inflation figure in December 2015 was higher than expected at 0.96 percent month-on-month (m/m). The monthly inflation rate was high due to rising prices of food and transportation caused by the Christmas and New Year celebrations. Nevertheless, Indonesia's annual inflation rate fell to the lowest level since 2010 as the impact of the November 2014 subsidized fuel price hike vanished from the annual inflation figure, hence inflation realization falling well below the government target (5 percent) and the central bank's target range (3 - 5 percent) in 2015.
Indonesia's December core inflation (excluding volatile and administered prices) slowed to 3.95 percent (y/y) from 4.77 percent (y/y) one month earlier.
Low inflation opens up room for Bank Indonesia to consider an interest rate cut. Currently, the benchmark interest rate (BI rate) is still relatively high at 7.50 percent. However, over the past months Bank Indonesia has emphasized repeatedly that it prefers financial stability over accelerated economic growth. As the global environment is still plagued by uncertainties (China's economic slowdown and more looming US interest rate hikes in 2016), the Indonesian rupiah remains fragile.
In 2016 Bank Indonesia targets an inflation rate in the range of 3 - 5 percent (y/y).
Read Column: Analysis of Inflation in Indonesia
Inflation in Indonesia:
| Month | Monthly Growth 2013 |
Monthly Growth 2014 |
Monthly Growth 2015 |
| January | 1.03% | 1.07% | -0.24% |
| February | 0.75% | 0.26% | -0.36% |
| March | 0.63% | 0.08% | 0.17% |
| April | -0.10% | -0.02% | 0.36% |
| May | -0.03% | 0.16% | 0.50% |
| June | 1.03% | 0.43% | 0.54% |
| July | 3.29% | 0.93% | 0.93% |
| August | 1.12% | 0.47% | 0.39% |
| September | -0.35% | 0.27% | -0.05% |
| October | 0.09% | 0.47% | -0.08% |
| November | 0.12% | 1.50% | 0.21% |
| December | 0.55% | 2.46% | 0.96% |
| Total | 8.38% | 8.36% | 3.35% |
Source: Statistics Indonesia (BPS)
Inflation in Indonesia and Central Bank Target 2008-2015:
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| Inflation (annual percent change) |
9.8 | 4.8 | 5.1 | 5.4 | 4.3 | 8.4 | 8.4 | 3.4 |
| Bank Indonesia Target (annual percent change) |
5.0 | 4.5 | 5.0 | 5.0 | 4.5 | 4.5 | 4.5 | 4.0 |
Sources: Statistics Indonesia and Bank Indonesia