The central bank of Indonesia (Bank Indonesia, BI) is expected to keep its benchmark interest rate (BI rate) at 7.50 percent at Thursday’s Board of Governors’ Meeting (14/08) as inflation has eased to 4.53 percent (year on year) in July while the country’s current account deficit may nearly double in the second quarter of 2014 to four percent of gross domestic product (GDP) from 2.06 percent of GDP in the previous quarter. Most analysts expect that Bank Indonesia will maintain the current BI rate for the remainder of 2014.

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On Monday (04/08), Statistics Indonesia (BPS) announced that the July 2014 inflation figure was 0.93 percent (month-on-month), considerably higher than the 0.43 percent of inflation in the previous month but significantly lower than the 3.29 percent inflation recorded in July last year (when inflation accelerated sharply due to higher subsidized fuel prices implemented by the government in June 2013). Head of BPS Suryamin stated that food prices contributed most to the July inflation pace, followed by instant food, drinks, cigarettes and tobacco.

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The pace of Indonesian inflation in July 2014 is expected to be in the range of 0.60 to 0.75 percent (month-on-month). If realized, this would be one of the lowest July inflation figures in recent Indonesian history. Traditionally, the month of July brings high inflationary pressures as consumers spend more on food products and other consumer goods as well as transportation amid the holy fasting month of Ramadan and subsequent Idul Fitri celebrations (which also involves the mudik tradition).

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Deputy Governor of Indonesia’s central bank (Bank Indonesia), Mirza Adityaswara, expects that inflation in July 2014 will reach between 0.8 and 0.9 percent (month-to-month). If realized, this would be relatively mild inflation amid a month that is traditionally characterized by high inflationary pressures due to the impact of the holy Muslim fasting period (Ramadan) and Idul Fitri celebrations. In this period Indonesian consumers always increase purchases of food and other consumer products such as clothes and shoes.

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Five emerging markets, India, Brazil, Turkey, South Africa and Indonesia, have become known to the world in 2013 as the ‘Fragile Five’, a term coined by analysts at Morgan Stanley. This term refers to those five emerging economies that were considered most vulnerable to the winding down of the US Federal Reserve’s quantitative easing program (bond-buying program) as capital inflows dried up, or, in fact reversed. The five countries were assessed as risky due to their twin fiscal and current-account deficits, slowing economic growth and high inflation.

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Bank Indonesia Governor Agus Martowardojo expects that inflation in July 2014 will be under control. However, there are several factors that trigger inflationary pressures. These include the holy Islamic fasting month Ramadan and subsequent Idul Fitri celebrations at the month-end, as well as higher electricity tariffs and the start of the new school season (inflation in July is traditionally higher than in other months due to seasonal factors). Martowardojo still believes that the year-end inflation target 3.5 to 5.5 percent can be achieved.

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The central bank of Indonesia (Bank Indonesia) decided to keep its benchmark interest rate (BI rate) at 7.50 percent at today’s Board of Governor’s meeting. The lending facility as well as deposit facility were maintained at 7.50 and 5.75 percent, respectively. The central bank believes that the current interest rate environment is able to push the inflation figure back to its target range of between 3.5 and 5.5 percent by the year-end. Earlier this month, Statistics Indonesia announced that inflation has eased to 6.70 percent (year-on-year) in June 2014.

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According to data from the Indonesian Automotive Industry Association (Gaikindo), domestic car sales in Indonesia rose 13 percent to 109,706 car units in June 2014 from the previous month (97,147 vehicles) as people increased car purchases ahead of the Idul Fitri (Lebaran) festivities, which commence after the holy fasting month of Ramadan has ended on 28 July. Idul Fitri involves the exodus of millions of Indonesians from the cities to their places of origin. Ahead of this celebration, car sales always increase.

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Ahead of the release of the Indonesian government’s official June consumer confidence report (expected to be released today), a survey conducted by the Danareksa Research Institute shows that Indonesian consumer confidence may have weakened 0.3 percent to 94.8 points in June 2014 amid concern about job availability and an expected slowdown in economic growth of Indonesia for the six months ahead. A reading below 100 points indicates pessimism, while a reading above 100 points indicates optimism.

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On Tuesday morning (01/07), Chief Statistician at Statistics Indonesia (BPS) Dr. Suryamin announced that inflation rose 0.43 percent (month-on-month) in June 2014. The foodstuff component provided highest inflationary pressures in the past month. On a year-on-year basis, headline inflation eased to 6.70 percent from 7.32 percent in May 2014. Calender year inflation (up to June 2014) rose to 1.99 percent. Later today, Indonesia Investments will publish an analysis of June inflation.

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In line with expectations, Indonesia's inflation rate eased to 2.79 percent year-on-year (y/y) in August 2016, from 3.21 percent (y/y) in the preceding month. Consumer price inflation in Indonesia fell on the back of declining prices after the Islamic celebrations of Ramadan and Idul Fitri ended in July. On a monthly basis, Indonesia recorded deflation of 0.02 percent (m/m) in August. Meanwhile, the manufacturing sector of Indonesia turned positive again.

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Gold investment levels in Asia continue to hold close to their all-time highs, and many regional investors are asking questions about what is next for the bullish trend in precious metals. To answer this question, it is important to take another look at old-fashioned economics as a means for determining how price valuations are likely to unfold in the future. One of the most critical economic forces in these areas is the force of market inflation, and its influence on the yellow metal can be significant depending on the underlying fundamentals present in the global economy.

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The central bank of Indonesia (Bank Indonesia) expects Indonesia's inflation to reach slightly below 1 percent month-to-month (m/m) in July 2016. According to central bank surveys, Indonesia's inflation accelerated in the first and second week of July by 1.18 percent (m/m) and 1.25 percent (m/m), respectively. Juda Agung, Executive Director of Bank Indonesia's Economic and Monetary Policy Department, said inflation tends to peak ahead of - and during - the Idul Fitri holiday (4-8 July) but is set to ease in the third and fourth week.

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Next week Indonesia's financial and stock markets are closed for Idul Fitri (also known as Lebaran or Eid al-Fitr), the celebrations that mark the end of the holy Islamic fasting month (Ramadan). As usual, during the Ramadan month (that started in early June) business activities in Indonesia start to slow and this slowdown will reach its "peak" during the Idul Fitri holiday, a national holiday (from Monday 4 July to Friday 8 July) when some 17.6 million Indonesians who live and work in the bigger cities will return to their places of origin for a couple of days (a tradition called mudik).

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The first day of the month - in case of a working day - implies that investors can count on the release of several macroeconomic data from Indonesia, specifically inflation and manufacturing activity. Statistics Indonesia (BPS) announced this morning (01/06) that Indonesia's consumer inflation reached 0.24 percent (m/m), or 3.33 percent (y/y), in May 2016. Meanwhile, the Nikkei Indonesia Manufacturing Purchasing Managers' Index (PMI) eased to a reading of 50.6 in May from 50.9 one month earlier. Lets take a closer look at these data.

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The central bank of Indonesia (Bank Indonesia) expects to see deflation in April 2016 on the back of controlled food prices as the harvest season has arrived. Bank Indonesia Governor Agus Martowardojo said a central bank survey shows deflation of 0.33 percent month-to-month (m/m) during the first three weeks of April. Besides lower food prices, Martowardojo also attributes April deflation to the government's decision to cut fuel prices (premium gasoline and diesel) by IDR 500 (approx. USD $0.04) per liter per 1 April. This move led to a 4 percent drop in public transportation tariffs.

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The central bank of Indonesia (Bank Indonesia) announced on Friday (15/04) it will adopt a new monetary tool per 19 August 2016 that is to replace the existing BI rate which is considered too inefficient to influence market liquidity as it is not directly tied to Indonesia's money markets. The seven-day reverse repurchase rate (reverse repo), which stood at 5.50 percent in the central bank's last auction, is to become the nation's new benchmark. Bank Indonesia Governor Agus Martowardojo, who communicated through a teleconference from Washington DC, emphasized that the central bank will not change its monetary stance.

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To assess Indonesia's purchasing power and consumer confidence it is always useful to take a look at car and motorcycle sales because when people are confident about their financial situation and have enough money to spend then they tend to buy cars and motorcycles (motorcycles are particularly popular among Indonesia's huge middle to lower-middle class segment). Meanwhile, cement sales inform about property and infrastructure development. Property development is also closely related to purchasing power and consumer confidence because property development grows when people's demand for property rises.

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The central bank of Indonesia (Bank Indonesia) expects to see deflation at 0.15 percent month-to-month (m/m) in February 2016. Bank Indonesia Governor Agus Martowardojo said lower (government) administered prices in combination with low core inflation will be the recipe for deflation in the second month of the year. The lower administered prices that are primarily the cause of deflation consist of fuel prices, air fares and 12-kilogram liquefied petroleum gas (LPG) canisters. In the first month of the year Indonesian inflation accelerated to 4.14 percent (y/y).

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Tomorrow (05/02), Statistics Indonesia is scheduled to release Indonesia's official full-year 2015 economic growth figure. Nearly all analysts expect to see a figure that reflects the continuation of slowing economic growth. Southeast Asia's largest economy expanded 5.0 percent in 2014 and this is expected to have eased further to 4.7 percent or 4.8 percent in 2015 on the back of (interrelated) sluggish global growth, low commodity prices, and weak export performance. Domestically, Indonesia has or had to cope with high interest rates and inflation (hence curtailing people's purchasing power and consumption as well as business expansion).

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