Indonesia Inflation (Core, ann. var. %, aop)

Inflation comes in at highest level since December 2022 in February

Inflation rose to 5.5% in February, slightly above January’s 5.3%. February’s result was the highest inflation rate since December 2022. The reading was driven by moderating price pressures for housing, water, electricity and household fuels and transport. Moreover, prices for recreation and entertainment grew at a more subdued pace.

The trend pointed up, with annual average inflation coming in at 4.8% in February (January: 4.5%). Meanwhile, core inflation fell to 3.1% in February, from January’s 3.3%.

Finally, consumer prices rose 0.16% in February over the previous month, coming in below the 0.34% increase logged in January.

Commenting on the outlook, Enrico Tanuwidjaja, economist at UOB, stated:

“The Indonesian economy continue to see higher economic activities and together with higher fuel prices, we believe there are reasons to keep our view that inflation will remain elevated in the first half of 2023. This will be even more so as Indonesia is fast approaching the fasting month in a few weeks’ time and ahead of the Eidal-Fitr festivities in April. Nevertheless, the slight deceleration of core inflation to just 3.1% y/y from 3.3% in January still bears symptomatic picture of sluggish demand recovery and will keep some lids for headline to rise further away.”