Indonesia's inflation is expected to accelerate in January 2016 according to the country's central bank (Bank Indonesia). Bank Indonesia detected a spike in prices of several food commodities - such as shallots, chili, and beef - at the start of the year. Bank Indonesia Governor Agus Martowardojo told reporters that he expects the country's inflation rate to rise by around 0.75 percent month-on-month (m/m) in January. This would imply that inflation will accelerate to 4.38 percent on an annual basis (from 3.35 percent y/y in December 2015).

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Although global media focus on the vicious terrorist attacks that occurred today in Jakarta, the country's central bank (Bank Indonesia) made a surprise move by cutting its key interest rate (BI rate) by 25 basis points to 7.50 percent at the January policy meeting. It is a surprise as Bank Indonesia emphasized repeatedly that it is primarily focused on rupiah stability while - amid severe market volatility (due to economic turmoil in China) - the rupiah remains under pressure.

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On 10 January 2016, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website over the last seven days. Most of the topics involve economic matters such as an analysis of the impact of China's economic slowdown on Indonesia, updates of inflation, manufacturing, oil output, Islamic banking, and much more.

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Indonesia's inflation figure in December 2015 was higher than expected at 0.96 percent month-on-month (m/m). The monthly inflation rate was high due to rising prices of food and transportation caused by the Christmas and New Year celebrations. Nevertheless, Indonesia's annual inflation rate fell to the lowest level since 2010 as the impact of the November 2014 subsidized fuel price hike vanished from the annual inflation figure, hence inflation realization falling well below the government target (5 percent) and the central bank's target range (3 - 5 percent) in 2015.

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Last year the benchmark stock index of Indonesia (Jakarta Composite Index) fell 12.13 percent to finish at 4,593.01 points on 30 December 2015 amid severe global uncertainty due to looming tighter monetary policy in the USA and the rapid economic slowdown of China. Today, the Indonesia Stock Exchange will have its first trading day of the new year. What do we expect from the performance of Indonesian stocks in January 2016?

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On 27 December 2015, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website over the last seven days. Most of the topics involve economic matters such as Indonesia's 8th economic stimulus package, inflation, how to set up a legal entity in Indonesia (for foreign investors), updates on Indonesia's coal, cocoa and geothermal industries, and more.

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Indonesian inflation may reach 2.9 percent year-on-year (y/y) only in full-year 2015, the lowest level since 2009 when inflation in Southeast Asia's largest economy was recorded at 2.78 percent (y/y). In recent years Indonesia's inflation has been volatile with peaks correlating with administered price adjustments (primarily fuel and electricity price hikes as the government is keen on limiting spending on subsidies). Another characteristic of Indonesia is that inflation is generally high (compared to advanced economies), which is in line with the higher economic growth pace (than that of advanced economies).

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Bank Indonesia, the central bank of Southeast Asia's largest economy, kept its key interest rate (BI rate) at 7.50 percent at the December policy meeting on Thursday (17/12). Meanwhile, the overnight deposit rate facility (Fasbi) was left unchanged at 5.50 percent and the lending facility at 8.00 percent. It was the tenth consecutive month without changing the country's interest rate environment (in February 2015 the central bank cut the BI rate by 0.25 percent).

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The Asian Development Bank (ADB) lowered its forecast for economic growth in Indonesia to 4.8 percent year-on-year (y/y) in 2015 and to 5.3 percent (y/y) in 2016 from previously 4.9 percent (y/y) and 5.4 percent (y/y), respectively. In its latest report on Indonesia, the ADB cited that problems related to budget disbursement and the nation’s weak export performance were the main factors to cut its growth projection for Indonesia - for both 2015 and 2016 - by 0.1 percentage point. In September 2015, the ADB had already cut its growth forecast for Indonesia on the back of negative effects of China’s economic slowdown.

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Indonesia's Statistics Agency (BPS) announced today that Indonesian inflation was recorded at 0.21 percent (month-to-month) in November 2015. On an annual basis, inflation eased markedly to 4.89 percent in November, from 6.25 percent in the preceding month, as the impact of the subsidized fuel price hike in November 2014 vanished from the annual inflation rate. In November 2014 inflation had accelerated 1.50 percent (m/m). Next month, Indonesia's annual inflation will most likely ease even more sharply.

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In the second half of September 2022 the Indonesian rupiah experienced some steep depreciating pressures, nearly touching IDR 15,300 per US dollar. It prompted Bank Indonesia to step and intervene in markets to limit the currency’s decline; a step that typically leads to a drop in the country’s foreign exchange reserves.

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Indonesia’s central bank (Bank Indonesia) – finally – decided to raise its benchmark interest rate by 25 basis points to 3.75 percent after concluding its two-day policy meeting on 23 August 2022, thereby joining the global wave of rate hikes as central banks need to combat accelerated inflation, while –especially in emerging markets – higher rates also function to prevent too much capital outflows as US assets become more attractive amid aggressive US Federal Reserve tightening.

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What came as a surprise to us is that the Asian Development Bank (ADB) decided to raise its projection for Indonesia’s economic growth in full 2022 from 5.0 percent year-on-year (y/y) to 5.2 percent (y/y) in July 2022. This decision was substantiated in its Asian Development Outlook 2022 Supplement entitled Recovery Faces Diverse Challenges.

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We were surprised to learn that Indonesia’s central bank (Bank Indonesia) decided to leave its interest rates unchanged at the two-day monetary policy meeting on 23-24 May 2022. The benchmark BI 7-Day Reverse Repo Rate was kept at 3.50 percent, while the deposit facility and lending facility rates were maintained at 2.75 percent and 4.25 percent, respectively. We had expected Bank Indonesia to raise its key rate by 0.25 percent to 3.75 percent at this occasion.

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With the Ramadan month just having started, it is important to take a look at food prices in Indonesia. The Ramadan-Idul Fitri period is typically a period when prices rise amid a significant increase in demand.

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It came as a big surprise to us when the central bank of Indonesia (Bank Indonesia) announced on 19 November 2020 (the day it concluded its two-day monetary policy meeting) that it decided to cut its benchmark interest rate (the seven-day reverse repo rate) by 25 basis points to 3.75 percent. Bank Indonesia also cut its deposit facility and lending facility rates by 25 basis points to 3.00 percent and 4.50 percent, respectively.

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The central bank of Indonesia (Bank Indonesia) decided to cut its benchmark interest rate ("BI seven-day reverse repo rate") by 25 basis points (bps) to 4.75 percent at the two-day policy meeting on 19 and 20 February 2020.

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On Monday 1 July 2019 Statistics Indonesia (BPS) released Indonesia’s latest inflation data. The data show that headline inflation in Southeast Asia’s largest economy eased to a level of 0.55 percent month-on-month (m/m) in June 2019, down from 0.68 percent (m/m) in May 2019 when price pressures peaked due to Ramadan and Lebaran celebrations. This period always gives rise to a significant boost in consumption, hence prices of foodstuffs peak. Meanwhile, people also tend to buy new clothes, bags and shoes because they want to look good at these celebrations.

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There is concern that the Indonesian government's plan to curb price increases of (non-subsidized) fuels in Indonesia will impact negatively on private investors' enthusiasm to invest in Indonesia's oil and gas industry. Earlier this week Arcandra Tahar, Deputy Minister at the Energy and Mineral Resources Ministry, informed that the government wants to regulate prices of fuels in order to keep inflation in check.

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The number of people who live in poverty in Indonesia fell by 1.19 million individuals, per September 2017, to 26.58 million, from 27.77 million poor people in March 2017 (Indonesia's Statistics Agency releases poverty data twice per year, covering the situation in the months March and September). This is a significant decline and therefore constitutes a very good development. In relative terms, Indonesia's poverty rate fell 0.52 percent from 10.64 percent to 10.12 percent (over the same period).

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