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Indonesia Inflation October 2019

Indonesia: Inflation subdued in October but remains within target range

Consumer prices increased 0.02% in October over the prior month, contrasting September’s 0.27% decrease. This month’s reading was based on higher prices for prepared food, beverages and tobacco, tempered by lower fresh food costs.

Inflation dipped to 3.1% in October from 3.4% in September, but remained close to the midpoint of Bank Indonesia’s target range of 3.5% plus or minus 1.0 percentage point, while core inflation was relatively unchanged at 3.2%. Under-control inflation should allow Bank Indonesia to maintain a dovish monetary stance and cut rates further if needed to support growth, with its next meeting scheduled for 20–21 November.

Analysts at Nomura see generally mild inflationary conditions in the near term, commenting:

“We expect food inflation to soften further until the end of harvest season in December. We also do not expect subsidized fuel prices to be raised anytime soon, given the government’s recent cancellation of its plan to raise gas prices for industrial use.”

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