Indonesian July inflation rate rises to 3.3%, led by food prices; core CPI slower

03, Aug. 2019

JAKARTA, NNA – Indonesia’s inflation accelerated slightly in July, led by higher food prices, but stayed within the central bank’s target range.

Statistics Indonesia released the latest consumer price index data Thursday.

Key points:

―― The overall CPI rose 3.32 percent from a year earlier, faster than the 3.28 percent increase in June. It was led by higher prices for chili and cayenne peppers as well as gold jewelry. Inflation accelerated 0.31 percent from the previous month, slower than the 0.55 percent increase in June.

―― The core reading excluding volatile food and energy prices climbed 3.18 percent, compared to 3.25 percent the previous month.

―― Statistics Indonesia head Suhariyanto, told reporters inflation was under control in July.

Takeaway:

―― Inflation is not a cause for concern in Indonesia. Last month, Bank Indonesia lowered its key interest rate for the first time since September 2017, as expected, in light of slower global economic growth amid the U.S.-China trade dispute. The central bank also signaled that it would ease further to prop up the economy, which slowed to the lowest growth rate in a year in the January-March quarter due to weaker consumption.

―― The central bank expects inflation this year will be below the midpoint of its target range of 2.5 percent to 4.5 percent.