indonesia inflation slows a second monthSharon Chen and Novrida Manurung
Indonesia’s inflation slowed for a second month in December, supporting the central bank’s decision to hold off interest-rate increases as exports slump.
Consumer prices climbed 4.3 percent from a year earlier last month, after a previously reported 4.32 percent gain in November, the statistics bureau said in Jakarta today. The median estimate in a Bloomberg News survey of 15 economists was 4.2 percent.
Bank Indonesia has kept borrowing costs unchanged for 10 straight meetings as exports tumbled and the rupiah weakened. Price pressure in Southeast Asia’s largest economy may rise as a planned increase in electricity tariffs and minimum wages take effect, with a possible reduction in fuel subsides also weighing.
“Inflation has stabilized at its current rate,” Aninda Mitra, head of Southeast Asia economics at Australia & New Zealand Banking Group Ltd., said after the data was released. “We think that inflation is headed higher on account of several factors such as low base effects, higher wages, and impending electricity and fuel price hikes.”
Price gains may accelerate to 4.9 percent in 2013, central bank official Perry Warjiyo said last month.
The rupiah weakened 0.5 percent to 9,685 per dollar as of 2:59 p.m. in Jakarta, after reaching a three-year low of 9,785 earlier, according to prices from local banks compiled by Bloomberg. The currency declined about 6 percent last year, the worst performance in Asia after the yen among 11 most-active Asian currencies tracked by Bloomberg.
Consumer prices rose 0.54 percent last month from November. The core inflation rate was 4.4 percent, the same as the 4.4 percent pace the month before.
Exports fell 4.6 percent in November, a separate report showed, declining for an eighth straight month. Imports climbed 9.9 percent from a year earlier, leaving a deficit of $478.4 million. The economy grew 6.17 percent in the three months ended Sept. 30 from a year earlier, holding above a 6 percent pace for an eighth quarter.
Exports may decline this year, while investment may rise, Vice President Boediono said in Jakarta today at the opening of trading at the Indonesia Stock Exchange. The government is optimistic Indonesia’s macro economy will “remain good,” he said.
Indonesia’s budget deficit reached 1.89 percent of GDP last year as government spending slowed and the government didn’t use reserves and risk-anticipation funds, Finance Minister Agus Martowardojo told reporter at the stock market opening in Jakarta today. The government’s 2012, deficit target was 2.23 percent of GDP.