- Inflation declined to 2.88% YoY (-0.14% MoM) on Jul-26, due to significantly lower food prices.
- Lower food prices are caused by start of harvest season and lower demand from FLP, while transport inflation rose through Pertamax price hike.
- The ongoing oil crisis, long El-Nino period, and higher CAD are likely to spark higher inflation over the next few months.
- Bank Indonesia would likely adopt a hawkish position to address these inflation risks.
