For the 4th year in a row Indonesian inflation was under control. Based on data from Indonesia’s Central Statistics Agency (BPS), the nation’s annual headline inflation rate was 3.13 percent in full-year 2018. By Indonesian standards, that is a low inflation figure. The final figure even fell below the central government’s 3.5 percent (y/y) target that was set in the 2018 state budget and it fell below our (revised) prediction of 3.25 percent (y/y). But it did fall conveniently within the central bank’s wide target range of 2.5 – 4.5 percent (y/y).

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Based on the latest data from Indonesia’s Central Statistics Agency (BPS), the nation’s annual headline inflation rate increased 3.23 percent year-on-year (y/y) in November 2018. The result is higher than we had anticipated and also implies that Indonesia’s consumer price index has now accelerated for a second straight month.

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The latest data from the Central Bureau of Statistics (Badan Pusat Statistik, or BPS) show that Indonesia’s inflation rate accelerated more than we had expected. Indonesia’s consumer price index rose 0.28 percent month-on-month (m/m) in October 2018 and 3.16 percent year-on-year (y/y).

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Based on the latest data of Indonesia's Statistics Agency (BPS), Indonesia experienced deflation of 0.18 percent month-on-month (m/m) in September 2018, a figure that exceeded our expectations. Consequently, Indonesia's annual inflation slowed to a two-year low of 2.88 percent (y/y), down from 3.20 percent (y/y) in August 2018. Year to date, Indonesian inflation eased to 1.94 percent in the January-September 2018 period.

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Indonesia's consumer price index experienced 0.05 percent deflation on a month-on-month (m/m) basis in August 2018, while we had actually expected to see modest inflation (considering imported inflation is bound to rise amid rupiah weakness). However, Suhariyanto, Head of Indonesia's Statistics Bureau (BPS), said Indonesia's consumer price index fell due to a drop in food prices, such as chicken meat and chillies.

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Indonesia's inflation rate was recorded at 0.28 percent month-on-month (m/m) in July 2018, slightly below estimates. Still, the country's annual inflation rate accelerated to 3.18 percent (y/y) in July, from 3.12 percent in the preceding month.

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Indonesian inflation was mild at 0.59 percent month-on-month (m/m) in June 2018, a month in which rising consumption amid the latter half of the Ramadan month and subsequent Eid al-Fitr celebrations gives rise to inflationary pressures in the world's largest Muslim-majority nation. On an annual basis, Indonesian inflation eased to 3.12 percent (y/y), down from 3.23 percent (y/y) in the preceding month.

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Indonesian inflation was slightly below estimates at 0.21 percent month-on-month (m/m) in May 2018 because food price increases were modest amid the Islamic fasting month (Ramadan), a period when consumption (hence demand for food) tends to rise. Although the Muslim community fasts during daytime, in the morning and evening many food parties are organized and therefore, overall, consumption rises during Ramadan and the subsequent Eid al-Fitr celebrations.

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In a speech in front of the House of Representatives (DPR) Indonesian Finance Minister Sri Mulyani Indrawati said the government targets an economic growth rate in the range of 5.4 - 5.8 percent year-on-year (y/y) for 2019. She said this range is a realistic one. Moreover, growth should be inclusive and equal, meaning all people across the nation should see an increase in their welfare. The government will give special focus on the acceleration of growth in eastern Indonesia, border areas, the outermost areas and underdeveloped regions.

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The pace of Indonesia's headline inflation was recorded at 0.10 percent month-on-month (m/m) in April 2018, a relatively high pace compared to April inflation in recent years. However, compared to the preceding month (when the consumer price index rose 0.20 percent m/m) Indonesian inflation eased. Meanwhile, on a year-on-year (y/y) basis inflation accelerated modestly to 3.41 percent (y/y) from 3.40 percent (y/y) in the preceding month. Calendar-year inflation accumulated to 1.09 percent in the first four months of 2018.

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Without any support from the United States, where Wall Street was closed due to the 4th of July festivities, stock indices in Europe found their way up. President of the European Central Bank, Mario Draghi, caused positive market sentiments after stating that the interest rate will remain low for a long while and that the current monetary (easing) policy will remain unchanged. Stock indices in Germany, France, Great Britain and the Netherlands went up between 2.1 and 3.1 percent on Thursday's trading day (04/07).

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Indonesia's main stock index (IHSG) took another large blow on Wednesday (03/07). The index fell 3.20 percent to 4,577.15 points as investors were worried after reading the revised outlook of the World Bank. The institution downgraded its forecast for economic growth in Indonesia in 2013 from 6.2 percent to 5.9 percent. Higher inflation, because of the recent subsidized fuel price hike, is expected to result in lower domestic consumption. The IDR rupiah posted a slight weakening to IDR 9,941.

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The World Bank has revised down its forecast for economic growth in Indonesia in 2013 to 5.9 percent from its original estimate of 6.2 percent. Similarly, the institution has altered its forecast for economic growth in 2014 from 6.5 percent to 6.2 percent. The revised figures were published in July's edition of the Indonesia Economic Quarterly (IEQ), titled 'Adjusting to Pressures'. The World Bank's forecast is also in sharp contrast with the GDP assumption of the Indonesian government, which puts economic growth in 2013 at 6.3 percent.

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Last week, Indonesia's main index (IHSG) rebounded 303 points to 4,818.90. After weeks of foreign outflows, Indonesia finally experienced capital inflows again during the last two days of the week. For example, on Friday (28/06) foreigners bought IDR 960 billion (USD $97.0 million) more Indonesian shares than they sold. However, considering the full week, foreigners still recorded net selling amounting to IDR 1.02 trillion (USD $103 million). Do these last couple of days tell us that the bearish market is over? Lets take a closer look.

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After several years of significant foreign capital inflows into Indonesia, a sharp contrast has been visible in recent weeks. Global panic that followed in the days after Ben Bernanke announced that the Federal Reserve intends to withdraw its quantitative easing program in 2014 (if economic recovery of the USA continues), hit Indonesia hard. It triggered a massive capital outflow from the country's stock exchange (IDX) as well as from government securities (Surat Berharga Negara, or SBN).

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Similar to the Jakarta Great Sale event, Indonesia's main stock index (IHSG) trades its stocks at low prices as foreign investors have sold large parts of their Indonesian stock assets in recent weeks. Last week, foreign investors sold IDR 4.9 trillion (about USD $492.4 million), meaning that this year's accumulated foreign net buying has evaporated. Will these sales continue? Yes, I think so. Foreigners have invested about IDR 144 trillion in Indonesia's capital markets between 2007 and Q1-2013. As such, there is still plenty to sell.

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It is official. As of Saturday 22 June 2013, after months of uncertainty and speculation, the price of Indonesia's subsidized fuel has finally been raised. Starting from 0.00 am (midnight) on Saturday, all Indonesians have to pay a higher price of gasoline and diesel. Gasoline has been raised by 44 percent to IDR 6,500 (USD $0.66) and diesel by 22 percent to IDR 5,500 (USD $0.56) per liter. The minister of Energy and Mineral Resources, Jero Wacik, made the announcement on late Friday evening, after which the hike took effect immediately.

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Indonesia's main stock index (IHSG) moved wildly last week. During the first two days of the week, the index fell to 4,609.95 points, which is considerably below its record high level of 5,214 on 20 May 2013. However, on the last trading day of the week (14/06), a 3.32 percent recovery occurred. Generally, it were domestic market participants that supported the IHSG. Foreign market participants continued to sell parts of their Indonesian stock portfolios. Total foreign selling totaled IDR 9 trillion (USD $910.4 million) last week.

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On Friday (14/06), the main stock index of Indonesia (IHSG) jumped 3.32 percent to 4,760.74 points as financial market participants were optimistic about the effects of the higher central bank interest rate that was announced the day before. Moreover, Indonesia's IHSG was supported by a green wave across Asian stock markets, which was partly due to a strong rebound in markets in the United States on Thursday (13/06). Stocks in Indonesia's banking and property sectors were the top-gainers on Friday's trading day.

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On Thursday (13/06), Indonesia's main stock index (IHSG) could not continue the recovery it had shown on the previous day. The index fell 1.92% to 4,607.66 points amid international and domestic concerns. Investors are worried about central banks' policies and the World Bank's downgrade of global economic growth in 2013. On the domestic side, negative sentiments were brought on by the fuel subsidy issue (and its inflationary impact), the weakening rupiah, the BI rate hike, falling foreign exchange reserves, and the trade deficit.

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