Indonesia: Inflation recedes in December
Inflation eased to 2.6% in December, down from November’s 2.9%. Looking at the details of the release, transport inflation was broadly stable in December compared to the previous month, while price pressures for food and housing, water, electricity and household fuels softened.
Accordingly, annual average inflation fell to 3.7% in December (November: 3.9%). Meanwhile, core inflation edged down to 1.8% in December, from the previous month’s 1.9%.
Lastly, consumer prices rose 0.41% over the previous month in December, accelerating from November’s 0.38% rise. December’s result was the sharpest increase in prices since December 2022.
Analysts at the EIU commented on the outlook for Indonesia’s inflation:
“Droughts caused by a prolonged El Niño in late 2023 resulted in damaged crops and will put upward pressure on food prices in early 2024. Consumer price inflation will start decelerating from the second quarter of 2024 as global food and fuel prices stabilise (Indonesia is a net importer of many grains and energy commodities) and the lagged impact of tighter monetary policy in 2023 feeds into domestic demand.”