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Indonesia Inflation July 2020

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

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.

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