Indonesia: Inflation falls again in March
April 1, 2014
Consumer prices rose 0.08% over the previous month in March, which was below the 0.26% increase tallied in February. March's modest increase was mostly driven by higher prices for prepared food, beverages, and tobacco as well as for healthcare. These increases were partially offset by lower prices for foodstuffs as the harvesting season begins and supply chains return to normalcy following the disruptions related to flooding in earlier months.
Annual inflation eased from 7.7% in February to 7.3% in March. The reading was broadly in line with market expectations and marked the lowest reading since June 2013. Annual average inflation rose from 7.0% in February to 7.2% in March. Meanwhile, the core inflation index, which excludes volatile items such as food and administered prices, increased 0.21% over the previous month (February: +0.37% month-on-month). Annual core inflation held steady at February's 4.6%.
The Central Bank's inflation target for 2014 is 3.5%-5.5% and 3.0%-5.0% for 2015. FocusEconomics Consensus Forecast panelists expect that inflation will average 6.3% in 2014, which is unchanged from last month's forecast. For 2015, panelists see inflation easing to 5.5%.
Author: Carl Kelly, Economist