Indonesia saw inflation continue to drop in July, moving even closer to dropping below 3 percent, the lower bound of the central bank’s target. According to Statistics Indonesia (BPS), the country’s annual consumer price index (CPI) growth slowed to its six-month low of 3.1 percent. “Annual inflation has consistently dropped since March 2023,” Pudji Ismartini, BPS’ undersecretary for services and distribution statistics, said in a press briefing on Tuesday (1/8). The recent figure drops from June’s 3.5 percent, which marked the first-time inflation had dipped below 4 percent since May 2022. Bank Indonesia (BI) has set this year’s inflation target at 3 plus-minus 1 percent, with the country’s July inflation inching toward the lowest range. Next year, BI projects inflation could be much lower at 2.5 plus-minus 1 percent range. Transportation remained the biggest inflation contributor last month, as prices in this expenditure group were up 9.58 percent year-on-year. Meanwhile, gasoline, rice and cigarettes were among the commodities that contributed the most to the annual inflation figure. As the inflation continues to moderate faster than market expectations, many believe that the headline inflation figure will drop below 3 percent soon. Although Indonesian inflation has been in a downward trend for some time, economists assess that a rate cut is not likely any time soon given that pressures still persist, especially from abroad, as many major central banks are expected to keep increasing rates to fight inflation in their respective countries. (ICE GIACARTA)

Fonte notizia: EEAS Jakarta - 4 August 2023