JAKARTA: Indonesia’s consumer prices increased 3.72% year over year in September and 0.13% on a monthly basis, per the Central Statistics Agency. The country’s core inflation, which excludes volatile items such as food prices, increased 3% year over year in September compared with 2.98% in August. The inflation is well within the central bank’s target range of 3-5%. Moreover, it was almost on par with economists’ expectations of 3.7% year-over-year inflation. Economists surveyed by the Wall Street Journal predicted a 0.1% rise in consumer prices on a monthly basis.
Indonesia’s central bank unexpectedly cut its benchmark interest rate twice, by 25 basis points each in August and September. It now stands at 4.25%. This was primarily possible owing to the comfortably low inflation the country is experiencing (read: Indonesia Unexpectedly Cuts Interest Rate: ETFs in Focus ). However, central bank governor Agus Martowardojo has hinted at no further rate hikes this year. Moreover, per a Bloomberg article, the country’s largest lender, PT Bank Mandiri’s president director Kartika Wirjoatmodjo has stated that the current rates are optimal to simulate business activity. Indonesia’s GDP grew 5% year over year in the second quarter of 2017, per Badan Pusat Statistik Indonesia. Per a World Bank report on Indonesia, the institution noted that it expects the economy to grow 5.1% this year. This is below the earlier estimates of 5.2%. Moreover, the World Bank expects the country’s economy to grow 5.3% in 2018. The growth rate is still far from president Joko Widodo’s target of a 7% growth rate during his term, which is supposed to end in 2019.
