Indonesia: CPI gathers further pace in August – UOB

Economist at UOB Group Enrico Tanuwidjaja, Haris Handy and Yari Mayaseti comment on the latest inflation figures in Indonesia.

Key Takeaways

“Indonesia’s annual inflation rate edged up to 1.59% y/y in Aug 2021 vis-à-vis 1.52% in the previous month; amidst easing restrictions in some regions as new cases dropped. This result is slightly below market expectations at 1.60% and remains below the central bank’s target range of 2% - 4.0%. On a month-on-month basis, Indonesia experienced inflation of 0.03%, a slowed from July’s 0.08%.”

“The government-administered prices and volatile prices component rose in Aug to 0.65% y/y (vs. July’s 0.61%) and 3.80% y/y (vs. July’s 2.97%), respectively. However, the annual core inflation rate (which excludes government-controlled and volatile prices) inched down to 4-month low of 1.31% y/y in Aug from July's 1.40%.”

“Out of 11 items in the inflation basket by expenditure, Aug 2021 inflation was mainly attributable to higher education inflation in the new academic year. In addition, August inflation print was also supported by faster rise in prices of food, drinks, and tobacco; housing and utilities; transport; household equipment; and health.”