Indonesia Inflation


Inflation falls to 22-month low in January

In January, consumer prices rose 0.76% over the previous month, which was above the 0.57% increase tallied in December. Food prices, the largest component of the consumer price index, increased over the previous month and had the biggest impact on the reading. In addition, prices in the housing category also rose markedly over the previous month. Despite the monthly rise, annual inflation fell for the fifth consecutive month, inching down from 3.8% in December to 3.7% in January. The figure was virtually in line with market expectations and marked the slowest pace seen in the last 22 months. Annual average inflation also moderated from 5.4% in December to 5.1% in January. Inflation has been slowing since January 2011, with the exception of a seasonal spike in August last year, thereby giving Bank Indonesia leeway for adopting a more accommodating monetary policy stance in recent months. The Central Bank has an inflation target of 4.5% 1% for 2012 and 2013.


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