Indonesia inflation holds at 8.38% but trade surplus improves

January 2, 2014

JAKARTA - At 8.38%, December CPI inflation in Indonesia was close to consensus expectations, but the November trade balance showed a larger-than-expected surplus (US$777 million vs consensus US$75 million). Core inflation crept up to 4.9% y/y from 4.8% in November.

ANZ Bank says that notwithstanding this slight uptick in sequential momentum, it expects headline inflation to move lower in 2014, particularly in mid-2014. “The one-off, subsidy reduction-related jump up in fuel prices is likely to wear off even though some of this feeds through to core inflation,” ANZ says. “(But) een then, CPI inflation is likely to remain above Bank Indonesia’s target until at least mid-2014. www.live.anz.com (ATI).