What about Indonesia's Inflation Rate in January 2017?
Indonesia's consumer price index is expected to rise in January 2017 amid higher food prices and higher government administered prices. Indonesian inflation in the first month of 2017 is estimated in the range of 0.60 - 0.70 percent month-on-month (m/m). Accelerating inflation in Southeast Asia's largest economy would imply that Indonesia's central bank (Bank Indonesia) has limited room to ease its monetary policy (by cutting the benchmark interest rate).
Main reasons why Indonesia's inflation rate should accelerate in January 2017 are higher food prices and administered price adjustments (higher electricity tariffs and higher fuel prices). Food prices have risen in Indonesia as the rainy season led to problems in the supply chain, while demand for food rose amid Chinese New Year celebrations (Imlek). For example, the price of chili - an important ingredient for Indonesian food - rose significantly.
Secondly, the government adjusted its spending on subsidies and therefore it raised both electricity tariffs (for 900 VA households) and fees for vehicle registration. Juda Agung, Executive Director at the Economic and Monetary Policy Department of Bank Indonesia, said growth of vehicle registration fees and electricity tariffs are expected to contribute 0.24 percent and 0.1 percent, respectively, to the monthly inflation rate in January 2017.
In fact, the impact of the electricity tariff hike in January is relatively limited as it only applies to the prepaid types. Next month, however, the postpaid types will be hiked and that should have a bigger impact on Indonesian inflation.
On Wednesday morning (01/02), Indonesia's Statistics Agency (BPS) is set to release Indonesia's official January 2017 inflation figure.
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% | 0.14% |
| November | 0.12% | 1.50% | 0.21% | 0.47% |
| December | 0.55% | 2.46% | 0.96% | 0.42% |
| Total | 8.38% | 8.36% | 3.35% |
3.02% |
Source: Statistics Indonesia (BPS)
Inflation in Indonesia and Central Bank (BI) 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 | 3.0 |
| BI Target (annual % change) |
5.0 | 4.5 | 5.0 | 5.0 | 4.5 | 4.5 | 4.5 | 4.0 | 4.0 |
Source: Bank Indonesia