Inflation Rate Seen Easing Again in September, Backing Central Bank's Rate Cut Play

Indonesia's annual inflation likely cooled for a third straight month in September, a Reuters poll showed on Friday (29/09). (Antara Photo/Aditya Pradana Putra)

By : Hidayat Setiaji | on 6:16 PM September 29, 2017
Category : Business, Economy

Jakarta. Indonesia's annual inflation likely cooled for a third straight month in September, a Reuters poll showed on Friday (29/09).

The consumer price index (CPI) likely rose 3.67 percent in September from a year earlier, compared with 3.82 percent in August, according to the median forecast from 14 analysts surveyed. Some cited more modest rises in food prices.

Indonesia's central bank has surprised markets by cutting its key interest rate for two months in a row to spur economic growth, predicting that inflation will remain well within its comfort range of 3-5 percent, giving it more room to ease policy.

The annual core inflation rate, which strips out government-controlled and volatile food prices, was seen at 2.96 percent in September, barely changed from the 2.98 percent in the previous month.

Gundy Cahyadi, an economist with DBS Bank, forecast headline inflation would stay around 3-4 percent in the medium-term, assuming global crude oil prices remain little changed.

However, he cited several risks to inflation, including a possible sudden sharp rise in food prices and a strengthening US dollar bringing in imported inflation.

Reuters

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