Indonesian consumer price inflation slows in February, likely to remain within BI’s target range in 2018

Indonesian headline and core inflation both slowed in the month of February. The headline consumer price inflation slowed to 0.17 percent on a sequential basis from 0.62 percent. Food prices slowed to 0.13 percent sequentially after an average rise of 2.30 percent sequentially in the earlier two months. Transport prices continued to be stable in the month in spite of an upward adjustment in retail prices of gasoline and diesel.

Meanwhile, core inflation slowed to 2.58 percent year-on-year, marking its fourth consecutive month of moderation. Underlying price pressures are expected to have stayed stable, given the view that growth is unlikely to considerably rebound in 2018, noted ANZ in a research report.

“We forecast 2018 GDP growth at 5.3 percent, a marginal improvement from 5.1 percent in 2017. We expect inflation to remain within the central bank’s 2.5-4.5 percent target range in 2018”, stated ANZ.

Bank Indonesia is expected to keep the monetary policy neutral with its 7-day reverse repo rate at 4.25 percent through 2018, added ANZ.

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