Inflation in Indonesia: Easing Inflation Trend Continues in August 2014

Inflation in Indonesia is traditionally high in the months June, July and August due to seasonal factors. The Muslim celebrations of Ramadan and Idul Fitri always trigger increased consumption among an expanding middle class. Moreover, families increase household spending ahead of the start of the new school year. In the month of August these inflationary pressures tend to ease and it is not uncommon to see deflation in September.

August inflation is expected to be in the range of 0.30 to 0.45 percent (month-to-month). There may still be some inflationary pressures caused by the higher electricity tariffs (which were introduced in May 2014). Food products, however, are expected to show deflation in this month.

On a year-on-year basis, inflation eased to 4.53 percent in July 2014 (finally falling within the target range of Indonesia’s central bank) after having been high since the Indonesian government raised prices of subsidized fuels in June 2013. Meanwhile, calendar year inflation (January-July 2014) has risen to 2.94 percent. In August 2013 inflation reached 1.12 percent (month-to-month) as it was still impacted by the higher subsidized fuel tariffs. Therefore, the year-on-year inflation figure (4.53 percent in July 2014) is also expected to decline.

 
Inflation in Indonesia:

Month	Monthly Growth           2013	Monthly Growth           2014
January	1.03%	1.07%
February	0.75%	0.26%
March	0.63%	0.08%
April	-0.10%	-0.02%
May	-0.03%	0.16%
June	1.03%	0.43%
July	3.29%	0.93%
August	1.12%
September	-0.35%
October	0.09%
November	0.12%
December	0.55%
Total	8.38%	2.94%

 

	Inflation Rate       July 2014	Inflation Rate   Calender 2014	Inflation Rate   year-on-year
General	0.93	2.94	4.53
- Core	0.52	2.40	4.64
- Administered Price	1.32	3.72	6.18
- Volatile	2.00	4.26	2.63

 

	2008	2009	2010	2011	2012	2013
Inflation (annual percent change)	9.8	4.8	5.1	5.4	4.3	8.4

^{Source: Statistics Indonesia}

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