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Indonesia Inflation August 2022

Indonesia: Inflation moderates in August

Consumer prices fell 0.21% over the previous month in August, swinging from July’s 0.64% increase. August’s result marked the weakest reading since September 2018. The result was driven by moderating price pressures for clothing and footwear and easing price pressures for transport. Moreover, prices for recreation and entertainment grew at a more subdued pace.

Inflation came in at 4.7% in August, which was down from July’s 4.9%. Annual average inflation rose to 2.9% in August (July: 2.6%). Conversely, core inflation rose to 3.0% in August, from the previous month’s 2.9%.

Commenting on the outlook, Rina Jio and Jonathan Sequeira, economists at Goldman Sachs, said:

“Going forward, we expect headline inflation to spike higher this month, as we forecast that the government could raise domestic fuel prices by 30% in coming weeks.”

On a similar note, Nicholas Mapa, Senior Economist at ING noted:

“As much as 58% of the CPI basket has inflation above target and we expect rising transport costs will likely lead to further price increases across the CPI basket. We believe brewing price pressures alongside the planned fuel price hike to prod BI to retain its hawkish bias with at least two more rate hikes carried out before the end of the year.”

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