Indonesia: Deflation pressure looks abated – UOB

Indonesia posted the first advance in the CPI following three consecutive months with negative figures, noted Economist at UOB Group Enrico Tanuwidjaja and Haris Handy.

Key Quotes

“Indonesia’s annual inflation rate picked up further in October by 1.44% y/y compared to 1.42% in the previous month. This also marked the first monthly inflation, up 0.07% m/m, after 3 straight months of deflation since July. Year-to-date, Indonesia inflation rate recorded at 0.95%. Meanwhile, core inflation slightly slowed by 1.74% y/y in October vs. September’s 1.86%.”

“October inflation print was mainly influenced by higher food prices, notably for red chili, cooking oil, and shallot.”

“Going forward, we expect the headline inflation to remain under control and gradually recover towards the lower-end of the government's 2.0-4.0% inflation target on the back of faster stimulus disbursement to boost the economic recovery. Nevertheless, downside risks remain as long as the consumers’ confidence is yet to return to pre-pandemic level.”