Indonesia's Inflation Rate Picks Up Slightly in June

Indonesia's annual inflation rate accelerated slightly in June as demand increased in the days leading to the Idul Fitri celebrations at the end of the month. (SP Photo/Mikael Niman)

By : Nilufar Rizki & Hidayat Setiaji | on 12:11 PM July 03, 2017
Category : Business, Economy, Featured

Jakarta. Indonesia's annual inflation rate accelerated slightly in June as demand increased in the days leading to the Idul Fitri celebrations at the end of the month, the Central Statistic Agency, or BPS, said on Monday (03/07).

The consumer price index rose 4.37 percent in June from a year earlier, the highest increase since March 2016. In May, the annual rate was 4.33 percent. A Reuters poll had expected a rate of 4.29 percent.

On a monthly basis, the inflation rate was 0.69 percent in June, faster than May's 0.39 percent, as consumer prices rose across the board, the agency said.

But Suhariyanto, the head of the statistics agency, said the inflation rate this year during Idul Fitri was "more manageable compared with the past three years."

However, June's annual core inflation rate, which excludes government-controlled and volatile food prices, cooled to 3.13 percent from 3.20 percent in May. The poll had expected 3.21 percent.

Indonesia's central bank targets annual inflation at 3-5 percent this year. Bank Indonesia's next policy meeting is July 19-20.

Economists expected the central bank to to stand pat on its benchmark interest rate at 4.75 percent, seeing no immediate  pressure from inflation or rupiah exchange rate.

"Unless we see food inflation continuing to inch higher towards the year-end, however, there is only a marginal risk of inflation overshooting. Still, inflation trend is tilted towards the upside and we reckon there is a chance of inflation topping the 5 percent mark later this year," the Singapore-based lender DBS write in a note to client on Monday.

The government may still need to rise fuel and electricity prices, should the global oil prices hover above $45 per barrel assumed in the state budget.

"Much will depend on crude oil price trajectory going forward, given how transport and housing/utilities inflation have been driving overal inflation this," DBS said.




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