CPI Data Indonesia Released: 0.22% of Inflation in September 2016
Indonesia's consumer price index (CPI) expanded 3.07 percent year-on-year (y/y) in September, up from the 2.79 percent (y/y) pace in the preceding month but remaining at a comfortably low level (for Indonesian standards). According to data from Statistics Indonesia (BPS), released earlier this morning (03/10), Indonesia's monthly inflation rate was 0.22 percent in September 2016, roughly in line with analysts' forecasts and the low inflation environment could be a reason for the central bank to cut its key interest rates again later this year.
BPS Head Suhariyanto commented on the country's latest inflation data. He stated that despite the small rise in September, Indonesian inflation remains under control. In the first nine months of the year, the pace of inflation has now accumulated to 1.97 percent (calendar year inflation). If inflation remains stable in the last quarter of the year, then the targets set by Indonesia's central bank (Bank Indonesia) and the central government will be achieved.
Indonesia has two traditional peaks in inflation. The first one being the June-August period when demand rises amid Islamic celebrations (Ramadan and Idul Fitri) as well as preparations for the start of the new school year. The second peak comes in the December-January period when Christmas and New Year celebrations encourage consumer spending.
In September 2016 Indonesian inflation was primarily caused by the education segment (due to rising college fees) and rising prices of instant food products, cigarettes and beverages.
Meanwhile, Indonesia's annual core inflation rate, which excludes administered and volatile food prices, was recorded at 3.21 percent (y/y) in September, down from the 3.32 percent recorded in August.
Prior to the release of Indonesia's September 2016 inflation data, analysts expected headline inflation to rise around 0.2 percent (m/m) due to growing prices of several agricultural commodities (particularly rice, chilies, cooking oil, and onions) as weaker-than-usual harvests have curtailed the supply-side. There are still some concerns that wetter-than-usual weather (the La Nina phenomenon) can disturb agricultural output in Indonesia in the last quarter of 2016.
Bank Indonesia still expects Indonesia's full-year inflation to reach 3 percent (y/y) in 2016, well within its target range of 3 - 5 percent (y/y). Indonesia's low inflation was also a key reason why Bank Indonesia has been able to lower its interest rate environment this year.
Inflation in Indonesia:
| Month | Monthly Growth 2013 |
Monthly Growth 2014 |
Monthly Growth 2015 |
Monthly Growth 2016 |
| January | 1.03% | 1.07% | -0.24% | 0.51% |
| February | 0.75% | 0.26% | -0.36% | -0.09% |
| March | 0.63% | 0.08% | 0.17% | 0.19% |
| April | -0.10% | -0.02% | 0.36% | -0.45% |
| May | -0.03% | 0.16% | 0.50% | 0.24% |
| June | 1.03% | 0.43% | 0.54% | 0.66% |
| July | 3.29% | 0.93% | 0.93% | 0.69% |
| August | 1.12% | 0.47% | 0.39% | -0.02% |
| September | -0.35% | 0.27% | -0.05% | 0.22% |
| 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 2008-2016:
| 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 | |
| Bank Indonesia Target (annual % change) |
5.0 | 4.5 | 5.0 | 5.0 | 4.5 | 4.5 | 4.5 | 4.0 | 4.0 |
Source: Bank Indonesia