Indonesia: Inflation comes in at highest level in over three years in April
Consumer prices increased 0.95% from the previous month in April, accelerating from the 0.66% increase logged in March. April’s result marked the highest reading since January 2017. The result was driven by quicker increases in prices for food.
Inflation increased to 3.5% in April, following March’s 2.6%. April’s result marked the highest inflation rate since December 2017. Accordingly, the trend pointed up mildly, with annual average inflation coming in at 1.9% in April (March: 1.8%). Lastly, core inflation rose to 2.6% in April, from March’s 2.4%.
Commenting on April’s result and its impact on Bank Indonesia’s upcoming meeting, Jonathan Sequeira Rina Jio and Andrew Tilton economists at Goldman Sachs, noted:
“With growth rising faster than we had anticipated, and inflation likely to breach the upper end of the inflation target band later this year, we’re building in a faster pace of tightening into our Bank Indonesia (BI) policy rate forecast path. We now expect BI to hike 50 basis points (bp) in Q3 and 75bp in Q4 for a total of 125bp of hikes this year (vs. 75bp previously), with another 100bp of hikes in H1 2023.”