25 Jul 2023 | News & Feature

“The bull”, ‘the boy”, and the still-limited risk of food inflation

  • Improving short-term inflation and interest rate expectations explains the recent increase in foreign capital inflows into Indonesia and other emerging markets.
  • The impact of rising wheat prices following the cancelled Black Sea grain deal on inflation expectations in the US may be limited. However, the increase in wheat consumption in the US and the worsening global production outlook indicate increasing competition among wheat importers to secure physical supplies.
  • Significant increases in rice imports in 2023 and ample liquidity in the public sector would help the Indonesian government to stabilise rice prices in the domestic market amidst the threat of El Nino and export bans.