Indonesia Inflation


Inflation falls for a third straight month in April

In April, consumer prices dropped 0.31% over the previous month, which was virtually unchanged from the 0.32% decrease observed in March. The fall mainly reflected lower food prices, which declined a substantial 1.90% over the previous month during the harvest period. Annual inflation fell from 6.7% in March to 6.2% in April, coming in below market analyst expectations, which had seen inflation easing to 6.4%. However, annual average inflation continued to rise, increasing from 5.9% in March to 6.1% in April and continuing the upward trend that began in May 2010. Lower food prices and a stronger rupiah have helped to contain inflationary pressures in the economy. Against this backdrop, at its most recent meeting held on 12 May, the Central Bank decided to maintain the benchmark interest rate for a third straight month, which currently sits at 6.75%. The dovish stance taken by the Bank was broadly expected by the market. The Central Bank set an inflation target of 5.0% 1% for this year and 4.5% 1% for 2012.


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