Indonesia: Inflation picked up further pace in April – UOB

Economist at UOB Group Enrico Tanuwidjaja and Haris Handy review the latest inflation figures in the Indonesian economy.

Key Quotes

“Indonesia’s annual inflation rate rose to 1.42% y/y in April 2021, according to the data released by National Statistics Bureau. This also marked the highest annual inflation since January (1.55% y/y), despite still below the central bank’s target range of 2.0% - 4.0%. Overall, the increase in volatile price inflation and administered prices inflation offset the slowdown in core inflation.”

“Out of 11 inflation baskets by expenditure, the pick-up in inflation was mainly attributable to higher food, clothing-and-footwear, housing equipment, transportation, information-communicationand-financial service, and recreation inflation; amidst Ramadhan and ahead of Eid festivity.”

“Going forward, we expect the headline inflation to gradually recover, and exceed the lower-end of the government's 2021 inflation target (2.0% - 4.0%), in the light of the ongoing vaccination program, accommodative monetary policy, and fiscal stimulus disbursement, which in turn will result in higher consumer confidence and demand; especially in the 2H21.”