The Central Statistics Agency (BPS) will announce the inflation figures this Monday morning. Head of Bank Permata’s Economic Department, Josua Pardede, projects that the inflation rate will remain below 2% until the end of 2024. Specifically for November 2024, the monthly inflation is estimated at 0.30%.
Josua predicts inflation in 2024 to be between 1.7-2.0%, compared to 2.81% in 2023, reflecting a more controlled inflation environment.
This lower inflation rate could provide room for Bank Indonesia (BI) to consider lowering the BI Rate, especially if aligned with the potential interest rate cuts by The Fed.
“We estimate that inflation will remain below two percent by the end of 2024, with a projected increase to around three percent in 2025,” said Josua, quoted from Antara, Monday (2/12/2024).
This forecast is based on several factors. One of these factors is the pressure on global energy prices, driven by geopolitical tensions in the Middle East and the Eurozone, which may be offset by the potential decline in global demand.
In addition, the risk of an increase may arise towards the end of the year, especially from the seasonal demand associated with the Christmas and New Year holidays.
In 2025, Josua predicts that inflation will rise along with several government policy measures.
The 2025 Financial Note highlights plans to impose excise taxes on sweetened packaged beverages and increase VAT rates.
Additionally, after a significant slowdown in 2024, the inflation rate will be influenced by a low base effect.
Beyond the impact caused by policies, inflation is expected to rise due to improved consumer demand, which has the potential to cause moderate demand-pull inflation.
“Although it is expected to increase, inflation is projected to remain under control, reaching around 3.12% by the end of 2025, in line with Bank Indonesia’s target range of 1.5 – 3.5%,” he said.
November 2024 Inflation
For Indonesia’s Consumer Price Index (CPI) in November 2024, a monthly inflation rate of 0.30 percent (mom) is projected, up from 0.08 percent (mom) in October.
Josua explained that this increase is primarily driven by seasonal demand ahead of the year-end, coinciding with the Christmas and New Year holidays, in line with general seasonal patterns.
As the impact of the harvest season diminishes, food prices in general are increasing. The volatile price index, which mostly includes food commodities, is expected to record a monthly inflation rate of 0.95 percent (mom), significantly up from -0.11 percent (mom) in October, largely influenced by the rise in prices of shallots, chicken meat, and cooking oil.
Then, the government-regulated price index is also expected to experience a monthly inflation of 0.12 percent (mom), reversing from -0.25 percent (mom) in October 2024, driven by higher non-subsidized fuel prices.
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