Indonesia: Inflation falls in February
March 3, 2014
Consumer prices rose 0.26% over the previous month in February, which was much lower than the 1.07% increase tallied in January. February's increase was primarily driven by higher prices for clothing as well as for prepared food, beverages and tobacco. The rise was also impacted by higher prices for foodstuffs, although the supply chain disruptions that followed the heavy rain and flooding that occurred in recent months have diminished.
Annual inflation dropped from 8.2% in January to 7.7% in February. The reading came in below market expectations of a fall to 8.0% and marked the lowest reading since June 2013. Annual average inflation rose from 6.8% in January to 7.0% in February. Meanwhile, the core inflation index, which excludes volatile items such as food and administered prices, increased 0.37% over the previous month (January: +0.56% month-on-month). Annual core inflation inched up from 4.5% in January to 4.6% in February.
The Central Bank's inflation target for 2014 is 3.5%-5.5% and it is 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