Indonesia: Higher upside pressure in inflation in December – UOB

Pablo Piovano FXStreet

Economist at UOB Group Enrico Tanuwidjaja reviews the latest inflation figures in Indonesia.

Key Takeaways

“Indonesia’s annual inflation rate rose to 1.87% y/y in December vis-à-vis 1.75% a month earlier, higher than market expectation of 1.80% (Reuters). This was the highest inflation rate since May, amidst loosening restrictions in some regions in the country. On a month-on-month basis, Indonesia’s inflation came in at 0.57% inflation in December, following a reading of 0.37% m/m in November. Annual core inflation rate rose slightly to 1.56% y/y in December (vs. November’s at 1.44%) and volatile prices component slowed to 3.20% y/y (vs. November 3.05%).”

“Going forward, we expect the headline inflation to gradually recover, and exceed the lower end of the government’s inflation target (2.0% - 4.0%), as the daily COVID-19 cases are now more under control. With the inflation still below the central bank’s target range; Bank Indonesia (BI) will have the policy space to remain accommodative to support the economic recovery.”

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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