Indonesia’s inflation edged up to four-month high in September, but still below market consensus as government gradually eased Covid-related restrictions.
The latest consumer price index (CPI) data marked the sixteenth consecutive month that inflation print hovers below central bank’s target range of 2% to 4%.
Annual inflation edged up ever slightly to 1.60% in September from 1.59% in the previous month, data from Statistics Indonesia showed. Analysts had expected for the CPI to rise 1.69%.
Tame price pressures
Core inflation, which strips out volatile items of food and energy, edged lower to five-month low of 1.30% compared with 1.31% in August.
Price pressures are expected to remain tepid for an extended period as domestic economy had only started showing signs of revival. Manufacturing Purchasing Managers’ Index (PMI) rose 8.5 points to 52.2 in September, reversing declines in the preceding two months.
“Although inflation is expected to gradually return to the target range amid a pick-up in economic activity, demand-side price pressures are unlikely to be strong enough to trigger rate hikes any time soon,” said Krystal Tan, economist at Australia and New Zealand Bank.
“Bank Indonesia has scope to keep policy accommodative for a prolonged period. We expect a gradual normalisation cycle to kick off only in late 2022,” she added.
Read more: ASEAN manufacturing numbers rebound in September
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