Indonesia: Inflation expected to recover in the next months – UOB
|Economist at UOB Group Enrico Tanuwidjaja and Haris Handy reviewed the latest inflation figures in Indonesia.
Key Quotes
“Indonesia’s annual inflation rate accelerated by 1.59% y/y in November vis-à-vis 1.44% in the previous month. This also marked the highest annual inflation since July, albeit remains below the central bank’s target range of 2.0% - 4.0%. On a month-to-month basis, inflation rose 0.28%, the highest since February this year before COVID-19 hit the country. Despite higher headline inflation, Core inflation, which excludes volatile and government-administered prices, slowed slightly to 1.67% y/y in November from 1.74% a month earlier; reflecting persistent weak demand.”
“Out of 11 inflation baskets by expenditure, November inflation print was mainly influenced by higher food prices which increased by 2.87% y/y vs. 2.25% in the previous month (notably for chicken, eggs, and red chili).”
“Going forward, we expect the headline inflation to remain under control and gradually recover towards the lower-end of the government's inflation target on the back of faster stimulus disbursement to boost the economic recovery and seasonal holiday at the end of the year which may trigger higher consumer demand. Nevertheless, downside risks remain as long as consumers’ confidence stays below pre-pandemic level.”
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