INDONESIA
Indonesian June CPI inflation came in below expectations with headline down 0.3pp to 2.5% y/y, lowest since September 2023, and core steady at 1.9%. Both are well within Bank Indonesia’s (BI) 1.5-3.5% target band with underlying inflation at the low end. BI left rates at 6.25% in June despite the weaker rupiah. It is “confident” that inflation will stay in the corridor and that its focus on FX stability will help contain import prices. With USDIDR still elevated at 16362, rate cuts remain some way off and are highly unlikely to occur before the first Fed easing.
- The moderation in June inflation was driven by lower food prices, which BI was expecting as harvests increase supply. Volatile foods price inflation moderated to 6% y/y from 8.1%.
- S&P Global reported that the weak rupiah continued to add to input cost pressures in June but they eased moderately compared to May. Selling price inflation remains restrained though as demand growth eases but they did pick up slightly last month.
- Utilities were stable at 0.5% y/y while transportation picked up to 1.6% y/y after 1.3%. Personal care prices were also higher.
- State administered prices rose 1.7% y/y.
Indonesia CPI y/y%
Source: MNI - Market News/Refinitiv
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