February 03, 2025 04:50 GMT
INDONESIA: Electricity Discount Pushes Headline Below Floor Of Band
INDONESIA
Indonesian headline and core inflation continued to diverge in January with the former falling below the bottom of Bank Indonesia’s 1.5-3.5% corridor, while core rose 0.1pp to 2.4%, 0.7pp higher than a year ago. BI cut rates 25bp in January with the next decision on February 19. IDR stability is likely to remain its focus and it will probably also look through the fall in headline and focus on core inflation as the former was impacted by government policy.
Indonesia CPI y/y%
Source: MNI - Market News/Refinitiv
- The headline CPI fell 0.8% m/m non-seasonally adjusted bringing the annual rate down to 0.8% y/y from 1.6% in December. The sharp drop was due to a 8.75% y/y decline in utilities inflation, while transportation rose 0.8% y/y from -0.3% and food, drinks & tobacco increased 3.7% y/y up from 1.9%.
- Utilities fell 9.1% m/m in January due to a 50% discount on electricity rates for some customers.
- Personal care, education and household equipment drove the slight pick-up in underlying inflation.
- BI intervened to defend the rupiah today as a surge in the US dollar (BBDXY +1.2%) weighed on currencies regionally. It said that it was intervening to improve confidence and FX supply/demand. USDIDR is currently up 1% to 16460 today after a high of 16470.50 earlier.
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