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March rate of 4.97% lowest since Aug 2022
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Stats bureau: consumption hasn't returned to normal
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C.bank predicts inflation to go back to target in Sept
(Adds comments by statistics bureau official, economists
paragraphs 6-11)
By Stefanno Sulaiman and Gayatri Suroyo
JAKARTA, April 3 (Reuters) - Indonesia's annual
inflation cooled to its lowest rate in seven months in March,
data from the statistics bureau showed on Monday, as prices rose
slower than usual during the beginning of the Muslim fasting
month of Ramadan.
March's annual inflation rate was 4.97%, the lowest since
August 2022, and down from 5.47% in the previous month. A
Reuters poll had expected a March rate of 5.2%.
The annual core inflation rate also came in below market
expectation, at 2.94% versus the poll's 3.05%. The April rate
was 3.09%.
Inflation in the Muslim-majority country typically rises
during Ramadan, which this year started in late March, and
leading up to the Eid al-Fitr celebrations.
The statistics bureau noted that this year's price pressures were below those seen in recent years, excluding the early years of the pandemic. "Consumption patterns have not returned 100% to normal (after the pandemic). This means demand was not high," said Pudji Ismartini, deputy head of the bureau. Inflation in Southeast Asia's largest economy has stayed above the central bank's target range of 2% to 4% since the middle of last year amid high global food and energy prices. Bank Indonesia (BI) officials have said inflation would likely return to its target range in September on base effects and after the central bank raised rates by 225 basis points between August to January. The government had raised fuel prices in September 2022. Maybank Indonesia economist Myrdal Gunarto said the "unexpectedly, very low" March inflation showed officials were successful in controlling price pressures, predicting annual inflation would slow further to 3.2% to 3.4% by the end of 2023. Radhika Rao, a DBS economist, said the inflation figures validated BI's view that inflationary pressures were dissipating.
"Policy rates are in for an extended pause, with the mixed
dollar tone also helping to contain volatility in the currency,"
she said.
(Reporting by Gayatri Suroyo, Stefanno Sulaiman and Fransiska
Nangoy; Editing by Martin Petty)
