Analysts Project Indonesian Inflation to Normalize in March

Deep News03-03 13:40

According to a report by economists Enrico Tanuwidjaja and Vincentius Ming Shen from UOB, Indonesia's inflation is expected to return to normal levels in March as base effects diminish. They noted that while the headline Consumer Price Index (CPI) reading for February exceeded the central bank's target range of 1.5% to 3.5%, the drivers were considered non-structural and unlikely to alter Bank Indonesia's current interest rate policy stance. The economists highlighted that food inflation remains the primary risk, but emphasized that the government and the central bank are working together to address the issue. Recent military conflicts in the Middle East could also pose some risks. UOB estimates that a sustained 15% increase in Brent crude prices over the next three quarters would raise the inflation rate by approximately 0.32 percentage points. The bank added that average inflation for the year is likely to be between 2.8% and 2.9%, near the upper end of the central bank's target range.

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