VIEW: Goldman Sachs Continues To Expect Q4 Easing

August headline and core inflation printed in line with July and consensus at 2.1% y/y and 2.0% y/y respectively. Goldman Sachs notes that lower fresh food inflation was offset by higher transport and personal care. It continues to expect Bank Indonesia to start cutting rates from its current 6.25% level in Q4.

• Goldmans notes that “on a seasonally adjusted sequential basis, headline CPI increased 0.2% mom s.a. in August, after falling 0.3% mom s.a. in the previous month.”
• “Food inflation slowed to 3.4% yoy in August (vs. 3.7% yoy in July) due to lower protein, red onion and sugar prices, with a partial offset from higher cayenne pepper prices. This contributed 0.9pp towards the headline inflation in August, compared to 1.0pp the previous month.”
• “Lower food inflation contributions were offset by modestly higher inflation in transportation and personal care costs on the back of an increase in non-subsidized fuel prices and higher gold prices, respectively.”