Indonesia: Inflation seen higher on base effects – DBS

DBS Group Research expects Indonesia’s February inflation to rise to 4.1% year-on-year, driven by a low base and fading one-off stimulus in administered prices. While most components should stay subdued, elevated precious metal prices are seen lifting personal care costs. The trade surplus is forecast above $3 billion, with a recent US court ruling potentially lowering effective tariffs and supporting exports.

Base effects and metals lift CPI

"Inflation in February likely rose to 4.1% y/y, largely reflecting a low base from the same period last year (Feb 2025: -0.1% y/y)."

"The fading impact of one-off stimulus measures implemented in 1Q25 should also become evident in the administered price component, which had contracted sharply by 9% y/y a year earlier."

"While most components are expected to remain subdued, elevated precious metal prices are likely to filter into the personal care segment, leading to a double-digit increase for the fifth consecutive month."

"Trade data, due the same day, are expected to show the surplus remaining above $3bn."

"Recent developments, including a US court ruling, may result in a modest reduction in Indonesia’s effective tariff rate, boding well for export performance going forward."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)