Indonesia Inflation Unexpectedly Accelerates on Food Prices
Indonesian inflation unexpectedly accelerated in June as food costs climbed, exacerbating the impact of a weaker currency on prices.
Consumer prices rose 4.53 percent last month from a year earlier after climbing 4.45 percent in May, the statistics bureau said in Jakarta today. The median forecast of 21 economists in a Bloomberg News survey was for a 4.38 percent increase.
Bank Indonesia has held off from adding to a February rate cut, seeking to support a currency that has fallen more than 3 percent in 2012 as Europe’s debt turmoil spurred outflows from emerging markets. The country will face inflationary pressures as the world’s largest Muslim population observes the fasting period of Ramadan from this month, central bank Deputy Governor Hartadi Sarwono said last week.
“Inflation is still moderate and manageable,” Eric Alexander Sugandi, an economist at Standard Chartered Bank Plc in Jakarta, said after the announcement. “BI will hold the rate this month to guard against rupiah volatility and reduce imported inflation from a weakened currency.” Standard Chartered revised its full-year inflation forecast to 4.5 percent from 6.5 percent, he said.
Exports in May fell 8.6 percent from a year earlier, after declining a revised 2.3 percent in April, the statistics bureau said. Imports rose 16.1 percent in the same period. Indonesia’s trade deficit in May was $486 million.
“Slowing global demand accompanied by declining global commodity prices, all led to a downward pressure on the export performance,” Anton Gunawan, chief economist at PT Bank Danamon Indonesia, said before the announcement. There has been “no significant improvement from the economies of the main trading partners, thus external demand will remain low.”
The rupiah gained 0.3 percent to 9,400 per dollar as of 12:23 p.m. in Jakarta today, after reaching a three-week high of 9,363 earlier, according to prices from local banks compiled by Bloomberg. The currency saw its worst quarter since 2009 in the three months ended June, declining 2.9 percent.
Consumer prices rose 0.62 percent last month from May, today’s report showed. The core inflation rate was 4.15 percent, compared with a previously reported 4.14 percent pace in April.
The inflation bias is toward the lower end of the central bank’s target of 3.5 percent to 5.5 percent this year, Sarwono said June 27.
To contact the reporter on this story: Novrida Manurung in Jakarta at firstname.lastname@example.org
To contact the editor responsible for this story: Stephanie Phang at email@example.com