Consumer Prices Update Indonesia: Deflation in September, Annual Inflation Eases
Indonesia experienced deflation, with consumer prices falling by 0.05 percent (month-on-month), in September 2015 on the back of lower food and transportation prices. Examples of lower food prices include chicken meat, eggs, chili peppers, onions and cooking oil. Regarding lower transportation costs it was particularly lower air transport tariffs that contributed to deflation. On an annual basis, Indonesian inflation eased to 6.83 percent in September, down from 7.18 (y/y) in the preceding month, and below analysts' estimates at 7.0 (y/y).
On Thursday (01/10), Statistics Indonesia (BPS) released the country's latest inflation data. BPS Chairman Suryamin said that inflationary pressures eased in the post-Ramadan and Idul Fitri period (a period that always triggers increased consumption) while the government's accurate monitoring of food prices bear fruit.
However, core inflation, which excludes volatile prices (such as food prices and administered prices), edged up to 5.07 percent (y/y) in September from 4.92 percent (y/y) in the previous month.
Headline Inflation in Indonesia:
| Period | 2013 |
2014 |
2015 |
| September (month/month) |
-0.35% | 0.27% | -0.05% |
| Calendar Year (Jan-Sep) |
7.57% | 3.71% | 2.24% |
| Annual Inflation (Sep'14-Sep'15) |
8.40% | 4.53% | 6.83% |
Source: Statistics Indonesia (BPS)
In the first nine months of 2015, Indonesia's (calendar-year) inflation stands at 2.24 percent, implying that it is still possible to stay within the central bank's target range of 3 - 5 percent (y/y) this year. Annual inflation is currently still high (6.83 percent) due to the subsidized fuel price hike in late 2014. Yesterday, the government announced that Indonesia's fuel prices will not be raised in the fourth quarter of 2015 (each quarter the government sets fuel prices based on global petroleum price movements) and therefore the annual inflation rate will continue to ease toward the year-end. However, there remains a risk caused by the weak rupiah (which brings imported inflation). Ahead of a looming interest rate hike in the USA, the Indonesian rupiah has already depreciated nearly 18 percent against the US dollar so far in 2015.
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% | |
| November | 0.12% | 1.50% | |
| December | 0.55% | 2.46% | |
| Total | 8.38% | 8.36% | 2.24% |
Source: Statistics Indonesia (BPS)
Inflation in Indonesia 2008-2014:
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | |
| Inflation (annual percent change) |
9.8 | 4.8 | 5.1 | 5.4 | 4.3 | 8.4 | 8.4 |
Source: World Bank
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.02 percent to IDR 14,654 per US dollar on Thursday (01/10). However, it has weakened 17.8 percent against the greenback since the start of the year.
Indonesian Rupiah versus US Dollar (JISDOR):
| Source: Bank Indonesia