Consumer Price Index of Indonesia: As Expected, Electricity Discounts Cause Deflation in February
Indonesia started 2025 with two straights months of deflation. And, again, this was not a real surprise as the 50 percent electricity rate discount for households up to 2,200 VA still applied in February 2025.
The headline deflation rate was recorded at -0.48 percent month-on-month (m/m) in February 2025. As a consequence, the year-on-year (y/y) headline rate also went into red territory at -0.09 percent (y/y), from 0.76 percent (y/y) in the first month of the year. It was the first time since March 2000 that Indonesia’s annual headline inflation rate fell into the red zone.
However, just like last month, there is no need for concern as deflation is not caused by a sudden decline in consumers’ purchasing power. How do we know? By looking at two matters: (1) the housing, electricity, water and household fuel expenditure group, and (2) core inflation.
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