Indonesia Inflation


Indonesia: Inflation accelerates for the first time in seven months

April 2, 2012

In March, consumer prices rose 0.07% over the previous month, which was slightly above the 0.05% increase tallied in February. Prices for prepared food, beverages and tobacco as well as housing rose over the previous month, more than offsetting a decline in food prices, the largest component of the consumer price index. Annual inflation rose for the first time since August 2011, increasing from 3.6% in February to 4.0% in March, which was in line with market expectations. Annual average inflation, however, edged down from 4.8% in February to 4.6% in March. The higher inflation reading came in amid changes to the government's initial proposal to reduce fuel subsidies in April. On 31 March, the Indonesian parliament rejected the government's plan for an immediate 33% increase in the price of subsidized fuel. Instead, lawmakers agreed to back the government's plan only if the average price of the Indonesian crude over a six-month period will rise 15% above the USD 105 per barrel assumed by the government in its 2012 budget. The Central Bank has an inflation target of 4.5%


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Note: Annual and monthly variation of consumer price index in %.
Source: Statistics Indonesia (BPS) and FocusEconomics calculations.

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