Notes on Economic: Inflation dips in September (Indonesia)

Notes on Economic: Inflation dips in September (Indonesia)

• Indonesia's CPI inflation came in better-than-expected in September, rising 4.61% year-on-year vs. our and market expectations of a 4.9% increase.  This was an improvement over August's 4.79% rise.  Core inflation also slowed in the month, rising 4.93% yoy as compared to August's 5.15%.
• Food prices which had pushed inflation higher in August, rose by a slower 5.27% yoy as compared to 5.84% in August.  Others components that decelerated in the month included processed food, clothing and transport.  Keeping inflation elevated however were housing cost (up 3.59% yoy) and education (5.35% yoy).
• Helped by easing commodity prices, inflation is likely to decelerate further in the coming months.  Already inflation is up 5.79% yoy in the first nine months of the year and should the pace of deceleration continues, this would suggest that there is some downside risk to our full-year forecast of 5.8%.  Easing inflationary pressure also suggests that it is unlikely that Bank Indonesia will hike its policy rate further this year, but will instead stand pat to support economic growth.

Source: OSK Nusadana

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