02 Sep 2021 | News & Feature

Inflation: Playing second fiddle to the Fed

  • Indonesia’s CPI registered a 1.59% YoY (+0.03% MoM) increase on August, largely driven by seasonal components such as foodstuffs and the annual increase in school tuition fees.
  • Fundamental demand however, remains constrained by the imposition of social restrictions and the persistent risk of a renewed surge in cases. Supply-side inflation remains relatively measured as well due to the government’s price controls.
  • With both supply and demand factors still relatively constrained, BI’s tightening cycle is likely to rest more upon the Fed’s policy rather than inflation.