(MENAFN- ING) Headline inflation dips to 5.4%
November inflation edged lower to 5.4% year-on-year, down from the previous month's reading of 5.7% and slightly slower than market expectations.
Meanwhile, core inflation was steady at 3.3% when market participants expected a slight pickup to 3.4%.
Slower inflation was noted for the heavyweight food and tobacco subsector, which was up 5.9% (6.8% previous), utilities 3.2% (3.3% previous), household equipment 5.0% (5.1% previous) and restaurants 4.6% (4.7% previous).
We had expected price pressures to experience a more pronounced acceleration due to second-round effects from the recent price hike for subsidised fuel but the dip in food prices was enough to weigh on the headline number.
Indonesia inflation slips below expectations but don't expect BI to pause just yet
Badan Pusat Statistik
BI likely still hawkish to close out the year
Bank Indonesia (BI) will still likely retain its hawkish leaning despite the lower-than-expected
inflation reading for November.
Core inflation was tagged as one of the main factors that would drive any BI policy adjustment and we will need to see this
head much lower before BI considers reversing its current hawkish stance.
One other factor that could keep BI on the hiking path would be the Indonesian rupiah, which is still down 8.8% for the year and at the weakest level since 1Q 2020.
We expect BI to follow through with a rate hike in December although we could see BI slow its pace of tightening as early as next year.
MENAFN01122022000222011065ID1105253992
Author:
Nicholas Mapa
*Content Disclaimer:
This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more here: https://think.ing.com/about/disclaimer/
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.