03 Jun 2024 | News & Feature

CPI - On track, with downslopes and upslopes

  • Indonesia’s inflation slowed down to 2.84% YoY in May 2024 (-0.03% MoM), mainly due to disinflation in foodstuffs. Rice prices have significantly eased because of the existing stock and lower demand.
  • Core inflation accelerated to 1.93% YoY, but it mostly reflects the rally in gold prices. On the other hand, no significant rise in other components may point to a weak domestic demand.
  • Even though imported inflation is currently on an upward trend, the recent regulation (Permendag 8/2024), which eases import restrictions, might suggest that there will be another round of import-driven disinflation.
  • There is still the possibility of a 25 – 50 bps hike from BI, but the concern is not inflation but Rupiah depreciation and Fed rate outlook.