Indonesia: Inflation remains mild in January, supporting potential further rate cuts
February 3, 2020
Consumer prices increased 0.39% in January over the prior month, up from December’s 0.34% increase. January’s reading was driven by higher prices for food, drinks and tobacco.
Inflation was unchanged at 2.7% in January, within Bank Indonesia’s target range of 3.0% plus or minus 1.0 percentage point, while core inflation dipped to 2.9% from 3.0%. However, it should be noted that from January 2020 Statistics Indonesia changed the base year from 2012 to 2018 and updated the consumption basket, meaning the figures for January are not directly comparable to the December numbers. Under-control inflation should allow Bank Indonesia to maintain a dovish monetary stance and leaves the door open to further rate cuts in order to support growth.
Author: Oliver Reynolds, Economist