Economist at UOB Group Enrico Tanuwidjaja assesses the recently published inflation figures in Indonesia.

Key Takeaways

“Aug’s headline inflation fell by 0.2% m/m and eased slightly to 4.7% y/y (4.9% in Jul) while core inflation rose to 3.0% y/y (prior 2.9%).”

“Inflation in Aug continued to be driven by elevated level of food and transport prices, as well as the housing, water, and electricity costs.”

“We keep our 2022 inflation forecast (average) at 4% but now with upside risks on the back of highly probable fuel price hikes in due course. As such, we maintain our view for BI to hike rates to reach 4.50% by year-end.”