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Indonesia Inflation February 2024

Indonesia: Inflation rises in February

Inflation increased to 2.8% in February from January’s 2.6%. February’s result was the highest inflation rate since December 2023. Looking at the details of the release, food and transport prices rose at a quicker pace in February compared to the previous month, while price pressures for housing, water, electricity and household fuels eased.

The trend pointed down mildly, with annual average inflation coming in at 3.3% in February (January: 3.5%). Meanwhile, core inflation was steady, coming in at January’s 1.7% in February.

Finally, consumer prices rose 0.37% over the previous month in February, accelerating from January’s 0.04% rise.

ING analyst Nicholas Mapa commented on the monetary outlook:

“Bank Indonesia (BI) recently pushed back on expectations that the central bank would be cutting policy rates in the near term. Governor Perry Warjiyo noted that although there was space to ease policy rates in 2024, he remained wary over a potential pickup in inflation in the first half of the year. On top of waiting for inflation to cool, BI will also likely base its decision to ease on the stability of the Indonesian rupiah. Thus we maintain our expectation for a potential BI rate cut in the third quarter but only if pressure on the IDR eases and inflation remains well within the new inflation target of 1.5-3.5%.”

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