Indonesia inflation rate drops to lowest in almost a decade

Price pressures have been steadily easing since last year amid subdued fuel and food costs. (Bloomberg pic)

JAKARTA: Inflation in Indonesia eased to a near-decade low, boosting odds that the next interest rate move by policymakers in Southeast Asia’s biggest economy could be down.

Consumer prices rose 2.57% in February compared to a year earlier, the lowest since November 2009, according to figures released by the statistics office in Jakarta on Friday. That was lower than the 2.75% median estimate in a Bloomberg survey of 24 economists.

Key Insights

The inflation slowdown gives policymakers further reason to call an end to an aggressive tightening cycle – a total 175 basis points of rate hikes since May.

Bank Indonesia has kept its key rate unchanged at 6% in the past three policy meetings Inflation is now at the lower end of the central bank’s 2.5% to 4.5% target band.

Price pressures have been steadily easing since last year amid subdued fuel and food costs.

Consumer prices fell 0.08% in February from the previous month, compared with a median estimate for a 0.04% decline, led by a drop in food The benign inflation environment provides President Joko Widodo with a timely election booster as he bids for a second term.

The presidential election is set for April 17 with the cost of living seen as a key voter concern Across the region, inflation is moderating. Consumer prices in Malaysia fell for the first time in a decade in January, while the Philippines is also set to report a slowdown next week.