Macro Economic

Indonesia Macro Update - INF 01 Feb 2024

Fikri C. Permana 01 February 2024

Thursday, 1 February 2024

Food Inflation Persist in Jan '24

As anticipated, the inflation rate in the first month of 2024 stood at 0.04% MoM (Cons: 0.27% MoM, KBVS: 0.12% MoM, Prev: 0.41% MoM). This figure represents the lowest monthly inflation in January over the past 9 years.  In Jan '24, the primary inflationary drivers continue to stem from the Food, Beverage, and Tobacco group.

Meanwhile, Indonesia's Manufacturing Purchasing Managers' Index (PMI) has consistently remained in the expansionary zone for the past 29 months, In Jan '24, the PMI for Indonesia's Manufacturing sector rose to 52.9 (Prev: 52.2), driven by faster new order growth and improved supply conditions, leading to the fastest production growth in two years.

In Feb '24, concerns about the ongoing El Nino phenomenon until Apr '24 are feared to continue affecting domestic food production. Coupled with potential demand-driven inflation, fueled by the distribution of social assistance and campaign funds ahead of the upcoming presidential and legislative elections in the middle of next month. Consequently, we predict a reversal in the usual trend of declining monthly inflation between Jan and Feb this year, reminiscent of the situation in 2001.

Fikri C Permana - KBVS Research Team