Indonesia: Inflation loses traction in June – UOB

Economist at UOB Group Enrico Tanuwidjaja and Haris Handy assess the latest inflation figures in the Indonesian economy.

Key Quotes

“Indonesia’s annual inflation rate slowed to 1.33% y/y in June 2021 vis-à-vis 1.68% in the previous month, according to the data released by National Statistics Bureau. This also marked as the 10-month low inflation rate since August 2020, and still below the central bank’s target range of 2.0% - 4.0%. On month-on-month basis, Indonesia experienced deflation of 0.16%.”

“We expect the recovery of the headline inflation could take longer than anticipated due to the resurgence of domestic COVID-19 cases… As a result, the government is set to enforce stricter restrictions in a bid to halt a rapid rise in coronavirus spread; which in turn will hit at the consumer confidence and consumption demand.”