Inflation in Indonesia seen higher in the near-term – UOB

UOB Group’s Economist Enrico Tanuwidjaja reviewed the recently published inflation figures in the Indonesian economy.

Key Quotes

“Indonesia’s annual Inflation rate slowed for a third straight month in November to 3.00% y/y (vs. October’s 3.13%), as prices for transport, clothing, and housing-electricity increased at a slower pace, which more than offset the higher food and process food prices”.

We expect higher inflation to continue amidst year-end festivities going into the first quarter of 2020. Nevertheless, the 2019 year-to-date inflation is currently averaging at 3.1% and we continue to see the full year inflation average to register lower than the mid point of 2.5% – 4.5% central bank’s official target range. For 2020, we are forecasting the inflation average a higher 3.6%, on the back of fuel subsidy removal and potential recovery in demand. Those factors may drive inflation higher while still keeping it within the range of central bank’s 2020 official target range (2.0% to 4.0%)”.

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