Indonesia Inflation


Inflation eases in March on the back of lower food prices

In March, consumer prices fell 0.32% over the previous month. The decline, which contrasted the 0.13% increase observed in February, mainly reflected lower food prices, especially for rice, which decreased a substantial 1.94% over the previous month. Annual inflation inched down from 6.8% in February to 6.7% in March and came in below market analyst expectations, which had seen inflation increasing to 7.0%. However, annual average inflation rose from 5.7% in February to 5.9% in March, continuing the upward trend that began in May 2010. Furthermore, at its most recent meeting on 12 April, the Central Bank decided to maintain the benchmark interest rate, which currently sits at 6.75%. The dovish stance taken by the Bank was broadly expected by the market. Nevertheless, the Bank stressed its readiness to further withdraw monetary stimulus as inflationary pressures remain high, despite inflation easing somewhat in March. The Central Bank set an inflation target of 5.0% 1% for this year and 4.5% 1% for 2012.


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