Indonesia: Inflation eases to 20-month low in December
January 2, 2012
In December, consumer prices rose 0.57% over the previous month, which was above the 0.34% increase recorded in November. Food prices, the largest component of the consumer price index, increased over the previous month and had the biggest impact on the reading. In addition, prices in the housing category also rose over the previous month. Annual inflation decelerated for the fourth consecutive month, falling from 4.2% in November to 3.8% in December. The figure was in line with market expectations and marked the slowest pace in the last 20 months. Annual average inflation also moderated from 5.6% in November to 5.4% in December. Inflation has been moderating since January, with the exception of a seasonal spike in August, thereby giving Bank Indonesia leeway for adopting a more accommodating monetary policy stance in recent months. The Central Bank has an inflation target of 4.5% 1% for 2012.