Indonesia Inflation December 2020

Indonesia

Indonesia: Inflation hits highest level since June in December

January 4, 2021

Consumer prices rose a seasonally-adjusted 0.45% over the previous month in December, accelerating from November's 0.28% increase. December's result marked the sharpest increase in prices since May 2018, and was driven largely by higher prices for food, beverages and tobacco.

Inflation rose to 1.7% in December, from November’s 1.6%. December's result marked the highest inflation rate since June, but was still substantially below Bank Indonesia’s 2.0%–4.0% target range. Meanwhile, the trend pointed down slightly, with annual average inflation coming in at 2.0% in December (November: 2.1%). Core inflation inched down, coming in at 1.6% from November's 1.7%.

Below-target inflation in recent months will likely encourage Bank Indonesia to maintain an accommodative monetary stance ahead. Our panelists see inflation rising back to target next year as the economy recovers.

FocusEconomics panelists project inflation of 2.4% in 2021, down 0.2 percentage points from last month’s forecast. In 2022, inflation is seen averaging 3.1%.


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