Consumer Price Index Indonesia: October Inflation Higher-Than-Expected
The latest data from the Central Bureau of Statistics (Badan Pusat Statistik, or BPS) show that Indonesia’s inflation rate accelerated more than we had expected. Indonesia’s consumer price index rose 0.28 percent month-on-month (m/m) in October 2018 and 3.16 percent year-on-year (y/y).
Monthly inflation at 0.28 percent is a relatively high number for Indonesia in the tenth month of the year. Over the past five years, monthly October inflation averaged 0.04 percent (excluding October 2014 when inflation soared 0.47 percent as newly inaugurated President Joko Widodo planned to raise subsidized fuel prices significantly).
At a press conference on Thursday (01/11) BPS Head Suhariyanto said there was an increase in prices in October 2018, especially prices of processed food items, rice and side dishes, air transportation tariffs, and cement. Meanwhile, higher prices of various fuels (which were raised per 10 October 2018) impacted on consumer prices.
Indonesia's October 2018 Inflation per Expenditure Group:
• Foodstuffs; +0.15 percent (m/m)
• Processed food, beverages, cigarette and tobacco; +0.27 percent (m/m)
• Housing, water, electricity, gas and fuel; +0.42 percent (m/m)
• Clothing; +0.54 percent (m/m)
• Health; +0.06 percent (m/m)
• Education, recreation and sports; +0.09 percent (m/m)
• Transportation, communication and financial services; +0.26 percent (m/m).
Read also: Analysis of Inflation in Indonesia
With the year-to-date inflation rate at 2.22 percent (January-October 2018), full-year inflation will surely fall comfortably within the central bank’s wide target range of 2.5 – 4.5 percent (y/y).
With two more months to go we expect Indonesia’s full-year 2018 inflation to reach 3.25 percent (y/y), a rather low rate by Indonesian standards. This would also mean that Indonesian inflation has been under control for four years in a row (the last time Indonesian inflation spiked out of control was in late-2014 amid subsidized fuel price adjustments).
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% |
| Year-to-Date | 2.22% |
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:
| October 2018 M/M |
October 2018 Y/Y |
October 2018 YTD |
|
| General | 0.28% | 3.16% | 2.22% |
| Core | 0.29% | 2.94% | 2.67% |
| Government Administered | 0.32% | 2.74% | 1.60% |
| Volatile | 0.17% | 4.48% | 1.58% |
| Energy | 0.68% | 3.12% | 2.62% |
Source: BPS
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Read the full article in the October 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: +6287884106944
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