Indonesia Macro Update - INF 02 May 2025
KBVS MACRO UPDATE
Friday, 2 May 2025
Apr '25 Inflation: Yearly Inflation Surges Beyond Eid al-Fitr Seasonal Trend
In a departure from typical seasonal patterns, Apr ‘25 inflation rose more sharply than expected following the Eid al-Fitr holiday. This is reflected in the headline inflation, which stood at 1.17% MoM and 1.95% YoY.
The electricity tariff adjustment notably pushed the Housing, Water, Electricity, and Household Fuels category to surge 6.60% MoM. Interestingly, the Food, Beverage, and Tobacco group—typically a key driver of inflation—was relatively flat in Apr ‘25, rising only 0.07% MoM.
We are concerned that this upward trend in annual inflation in Apr ‘25 could lead to a continued increase in household consumption expenditure. Thus, we estimate that GDP growth for both 1Q and 2Q25 will likely fall below the 5.0% threshold.
Looking ahead, we expect monthly inflation to moderate. However, the lingering effects of electricity tariff normalization remain a key upside risk to future inflation.
Regards,
Fikri C Permana – KBVS Research Team