Indonesia Macro Update - INF 08 Apr 2025
KBVS MACRO UPDATE
Tuesday, 8 April 2025
Mar '25 Inflation: Annual Inflation Rebounds from Deflation
The 2.07% MoM increase in inflation for the food, beverage, and tobacco category was the primary driver behind the overall Consumer Price Index (CPI) inflation rising to 1.65% MoM. On an annual basis, inflation accelerated to 1.03% YoY, accompanied by an uptick in core inflation to 2.48% YoY.
The decline in public mobility during the 2025 Eid period compared to the previous year also underscores this sentiment. From a technical perspective, the still-low inflation in March 2025 was shaped by consecutive monthly deflations earlier in the year—0.76% MoM in January and 0.46% MoM in February.
Looking ahead, we expect inflation to remain manageable, providing sufficient room for additional BI Rate cuts. However, the recent depreciation pressure in the offshore Rupiah market (NDF), which we assess as speculative activity capitalizing on the extended Eid holiday period in Indonesia, merits close monitoring to ensure Rupiah stability and mitigate the risk of imported inflation.
Regards,
KBVS Research Team