Indonesia Inflation August 2020

Indonesia

Indonesia: Inflation drops to lowest level since May 2000 in August

September 1, 2020

Consumer prices fell a seasonally-adjusted 0.05% from the previous month in August, driven by lower prices for food, beverages and tobacco. This was broadly unchanged from the 0.10% fall seen in July.

Inflation came in at 1.3% in August, which followed July’s 1.5%, remaining below Bank Indonesia’s 2.0%—4.0% target range for the second straight month. August's figure represented the lowest inflation rate since May 2000. Accordingly, the trend pointed down mildly, with annual average inflation coming in at 2.5% in August (July: 2.6%). Lastly, core inflation edged down to 2.0% from the previous month's 2.1%. Weak price pressures are being driven by soft demand and low oil prices.

Inflation is seen returning to the lower part of the target range later this year, although if it continues to undershoot, this could provide an added incentive for the Central Bank to ease its monetary stance further.

FocusEconomics panelists project inflation of 2.3% in 2020, down 0.1 percentage points from last month’s forecast. In 2021, inflation is seen averaging 2.9%.


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Indonesia Inflation August 20 20 0

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


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