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Economic & Fixed Income

03 June 2024

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Indonesia May Inflation: 3 June 2024

  • Indonesia's annual May inflation rate fell to 2.84%, slightly lower than the market's Consensus and SSI's forecast of 2.97%, and down from the 3.0% recorded in April.
  • ⁠We see this as a combination of slower demand after Lebaran (diminishing THR effect) and harvest period that usually occured in January to March being pushed back to March-May. This can be observed through slower increases in communication and financial services (-0.16% compared to -0.13%) and prices of food (6.18% versus 7.04% in April).
  • On a monthly basis, the Consumer Price Index (CPI) unexpectedly decreased 0.03% in May 2024 from the previous month, contrary to our forecast of 0.1% rise, and reversing from a 0.25% increase in April 2024.
  • ⁠We also observe this softer inflation materialized predominantly on the back of lagging consumption effect, which we eventually see this slower demand as a potential obstacle to achieving the government's 5%+ economic growth target (SSI's projection: 4.8%) this year.

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Inflation - June 2024

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Inflation - June 2024

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