Macro Economic

Indonesia Macro Update - INF 01 Apr 2024

Fikri C. Permana 01 April 2024

Monday, 1 April 2024

Inflation in Mar’24 Driven Again by Volatile Food Prices

The surge in prices of essential commodities, particularly volatile foods reaching 2.16% MoM or 10.33% YoY, continues to drive headline inflation, which stands at 0.52% MoM or 3.05% YoY, marking a 7-month high.

In Mar '24, data from S&P Global Indonesia Manufacturing PMI rose again, reaching 54.2 (Prev: 52.7), marking the highest value since Oct '21. Output increased to a 27-month high, driven by new order growth hitting a seven-month high ahead of the Eid al-Fitr festival.

The anticipated increase in demand for goods and the rise in population mobility ahead of the Eid al-Fitr festivities are expected to drive higher inflation in Apr '24, although it is projected to be lower than that of Apr '23, given the abundant harvests in March and April '24. Moreover, the steady airline fares are expected to help contain inflation, keeping it from exceeding 0.33% MoM, similar to what occurred during the 2023 Eid al-Fitr period.

Fikri C Permana - KBVS Research Team