Indonesia Inflation July 2020

Indonesia

Indonesia: Inflation falls to lowest level since May 2000 in July

August 3, 2020

Consumer prices fell a seasonally-adjusted 0.10% in July over the prior month, swinging from June's 0.18% increase. July's result marked the sharpest fall in prices since September 2019, and came on the back of lower food prices.

Inflation came in at 1.5% in July, below June’s 2.0%. July's result represented the lowest inflation rate since May 2000. Annual average inflation fell to 2.6% in July (June: 2.7%), while core inflation fell to 2.1% from June’s 2.3%. Weak price pressures were driven by depressed demand due to the pandemic.

Our panelists see inflation returning to the Central Bank’s 2.0%—4.0% target range later this year as economic activity revives. However, price pressures will remain muted by historical standards, which could provide the rationale for further monetary easing.

FocusEconomics panelists project inflation of 2.4% in 2020, down 0.2 percentage points from last month’s forecast. In 2021, inflation is seen averaging 2.9%.


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Indonesia Inflation July 20 20

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


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