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Latest Reports Inflation
On Sunday 5 November 2023 Indonesia Investments released the October 2023 edition of its monthly report. The report informs readers on the latest - and in our opinion most relevant - economic, political and social developments in Indonesia.
As expected, inflationary pressures increased on a month-on-month (m/m) basis in September 2023. However, on a year-on-year (y/y) basis, Indonesian inflation eased quite significantly as the impact of the subsidized fuel price hike in September 2022 is now removed from the data. Based on the data from Indonesia’s Statistical Office (BPS), Indonesia’s headline inflation decelerated to a rate of 2.28 percent (y/y).
In line with our forecast, Indonesia recorded mild deflation in August 2023. Based on the latest data from Statistics Indonesia (BPS) Indonesian deflation was recorded at 0.02 percent month-on-month (m/m) in August 2023. But because deflation was milder than last year, Indonesia’s annual inflation accelerated to 3.27 percent (y/y).
On Thursday (07.09.2023) Indonesia Investments released the August 2023 edition of its monthly report. The report discusses a selection of key economic, political and social developments that were relevant in Indonesia in the month of August 2023.
Again, Indonesia experienced another month characterized by low inflation. Based on the latest data from Statistics Indonesia (BPS), Indonesian inflation was recorded at 0.21 percent month-on-month (m/m) in July 2023, significantly lower than the 0.64 percent (m/m) that was recorded in the same month one year earlier.
On 7 August 2023 Indonesia Investments released the July 2023 edition of its monthly report, zooming in on various economic, political and social matters that were relevant in the month of July 2023.
On 6 July 2023 Indonesia Investments released the June 2023 edition of its monthly report. In the report we present a number of analyses of topics (all related to the economy, politics and social matters) that were relevant in Indonesia in the month of June 2023.
Again, Indonesia experienced another month characterized by low inflation. Based on the latest data from Statistics Indonesia (BPS), Indonesian inflation was recorded at 0.14 percent month-on-month (m/m) in June 2023, significantly lower than the 0.61 percent (m/m) that was recorded in the same month one year earlier.
Typically, the Ramadan month and Idul Fitri week is a period of elevated inflation as people consume and travel more than usual amid the festivities. This year, however, inflationary pressures were remarkably low. According to the latest data of Statistics Indonesia (BPS), inflation reached 0.33 percent month-on-month in April 2023.
On 4 May 2023 Indonesia Investments released the April 2023 edition of its monthly report. The report discusses a range of subjects related to the economy, politics and social matters that we found were relevant in April 2023.
Latest Columns Inflation
Inflation in Indonesia was lower than expected in May 2024. In fact, the latest data from Indonesia’s Statistical Office (Badan Pusat Statistik, or BPS) show a contraction in overall prices (in other words: deflation). With an annual headline inflation rate of 2.84 percent, it means price pressures remain under control in Indonesia.
While we saw the highest monthly inflation rate (of the year) in December 2023, it was lower than we had projected. The latest data published by Indonesia’s Statistical Office (Badan Pusat Statistik, BPS) show that headline inflation reached 0.41 percent month-on-month (m/m) in December 2023.
As expected, the central bank of Indonesia (Bank Indonesia) decided to impose a 50 basis points (bps) interest rate hike after concluding its two-day monetary policy meeting on 16-17 November 2022.
For me, G20 summits were always interesting occasions as the leaders of the world’s strongest economies gather to discuss plans to move forward. This year, however, it was the first time that I was quite reluctant to follow the summit (despite the 2022 edition being organized on the Indonesian island of Bali).
As usual, we devote our first article to the Indonesian economy. But before we zoom in on the latest macroeconomic data of Indonesia, we first provide some context by discussing the global economy.
Before turning our attention to the economy of Indonesia, it is important to take a closer look at the global economy first. Fortunately, the Organization for Economic Cooperation and Development (OECD) just released a new update (called the OECD Economic Outlook, Interim Report September 2022) and so it’s certainly worthwhile to take a look at its conclusions.
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.
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.
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.
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.
