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Indonesia Inflation January 2024

Indonesia: Inflation falls to lowest level since September 2023 in January

Inflation came in at 2.6% in January, which was down from December’s 2.8%. January’s figure marked the lowest inflation rate since September 2023. The moderation was primarily due to softer growth in prices for food, transport, and clothing and footwear. Moreover, prices for recreation and entertainment grew at a more subdued pace.

Annual average inflation fell to 3.5% in January (December: 3.7%). Meanwhile, core inflation was stable, coming in at December’s 1.7% in January.

Lastly, consumer prices increased 0.04% in January over the previous month, a smaller increase than December’s 0.42% increase. January’s result marked the weakest reading since August 2023.

UOB analyst Enrico Tanuwidjaja commented on the release:

“On balance, still sluggish demand, especially on purchases of durable and large ticket items, despite externally-driven upside risks to inflation in Indonesia are still keeping a lid on prices and thus it is not materially significant for us to revise our headline inflation forecast. We expect inflation to average lower to the tune of 3% this year, down from 3.6% last year. Starting in 2024, BI has a lower inflation target range of 1.5-3.5%, rendering our forecast at slightly above BI target range’s midpoint. We also reiterate our BI rate forecast to remain steady at 6% throughout this year and only likely to enter into a rate-cutting cycle in early 2025.”

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