Indonesia: Inflation remains close to the Central Bank’s target midpoint in September
Consumer prices decreased 0.27% in September over the prior month, contrasting August’s 0.12% increase. September’s figure was driven by lower food prices.
Inflation dipped from 3.5% in August to 3.4% in September, remaining close to the midpoint of Bank Indonesia’s target range of 3.5% plus or minus 1.0 percentage point, while core inflation was stable at 3.3%. Under-control inflation should allow Bank Indonesia to maintain a dovish monetary stance and cut rates further if needed to support growth.
Analysts at Nomura are sanguine about the inflation outlook: “As Indonesia has just entered harvest and rainy seasons, food inflation should soften further. We also do not expect subsidized fuel prices to be raised anytime soon, as crude oil prices have stabilized after the recent jump. Next year, however, the 23% cigarette excise tariff increase poses upside risks to our inflation forecast.”