Indonesia’s July Inflation Rises 0.93% on Higher Food & Transportation Prices
Inflation in Indonesia accelerated more than expected in July 2015. Based on the latest data from Statistics Indonesia (BPS), Indonesian inflation rose 0.93 percent (m/m) in July, primarily due to higher food and transportation costs caused by the Ramadan month and Idul Fitri celebrations. During this month, the people traditionally increase consumer spending (triggering higher food prices) and millions of people travel back to their places of origin for the Idul Fitri festivities (triggering higher transportation costs).
On a year-on-year basis, Indonesian inflation remained at 7.26 percent (y/y) in July, exactly the same level as last month. However, most analysts expected inflation to ease in July as the people’s purchasing power has weakened.
Calendar year inflation (January-July 2015) rose to 1.90 percent. Meanwhile, core inflation (which excludes volatile food and administered prices) eased to 4.86 percent (y/y) from 5.04 percent (y/y) last month.
Considering that inflation is still far above the central bank’s target range (3-5 percent y/y), the central bank is not expected to cut its benchmark interest rate (BI rate) at the next Board of Governor’s Meeting (scheduled for 18 August). Currently, the BI rate stands at 7.50 percent.
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% | |
| September | -0.35% | 0.27% | |
| October | 0.09% | 0.47% | |
| November | 0.12% | 1.50% | |
| December | 0.55% | 2.46% | |
| Total | 8.38% | 8.36% | 1.90% |
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