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Inflation falls below 5% for first time since fuel price hike
Inflation slowed down in March partly due to a base effect, but the real impact of Ramadan may bump consumer prices up this month.
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Traders unload baskets of Ramadan parcels at Cikini Market in Central Jakarta, on March 31. On the second week into Ramadan, traders reported a 20 percent increase in parcel sales and expressed hope sales would continue to rise until Idul Fitri, which falls on April 22. (Antara/Sigid Kurniawan)
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nflation has dropped below 5 percent for the first time since the government raised fuel prices in September of last year, with the March data coming in lower than analysts had expected.
However, the effect of Ramadan may bump the rate up again this month, according to economists.
Statistics Indonesia (BPS) announced on Monday that the consumer price index (CPI) had increased by 4.97 percent year-on-year (yoy) last month, marking a slowdown from the rate of 5.47 percent recorded in February. The monthly inflation rate rose marginally to 0.18 percent in March from the 0.16 percent increment logged in the preceding month.
The headline inflation figure matched a forecast from Bank Permata but was lower than predictions by Bank Mandiri and Moody's Analytics for CPI growth of 5.09 percent and 5.6 percent, respectively.
Consumer prices were pushed up by higher transportation costs in March, which were up 13.72 percent from a year earlier, largely due to a hike in airfares, according to the BPS data.
Products in the food, beverages and tobacco segment cost 6.05 percent more than a year earlier, driven largely by higher prices of rice and filtered cigarettes.
Faisal Rachman, an economist at Bank Mandiri, explained that the slowdown in headline inflation was partly attributable to a base effect caused by the spike in inflation logged in March of last year, when food and energy prices surged following the breakout of war between Russia and Ukraine and Indonesia's revocation of the retail price ceiling for cooking oil.
