Indonesia’s inflation drops to lowest in 9 years

Indonesia’s inflation drops to lowest in 9 years

A shopkeeper arranges snacks to sell at a mini market in Jakarta on Feb 15. (Reuters photo)
A shopkeeper arranges snacks to sell at a mini market in Jakarta on Feb 15. (Reuters photo)

JAKARTA: Inflation in Indonesia eased to a near-decade low, boosting odds that the next interest rate move by policymakers in Southeast Asia’s biggest economy could be down.

Consumer prices rose 2.57% in February compared to a year earlier, the lowest since November 2009, according to figures released by the statistics office in Jakarta on Friday. That was lower than the 2.75% median estimate in a Bloomberg survey of 24 economists.

The inflation slowdown gives policymakers further reason to call an end to an aggressive tightening cycle of 175 basis points of rate hikes since May. Bank Indonesia has kept its key rate unchanged at 6% in the past three policy meetings.

Inflation is now at the lower end of the central bank’s 2.5% to 4.5% target band. Price pressures have been steadily easing since last year amid subdued fuel and food costs.

Consumer prices fell 0.08% in February from the previous month, compared with a median estimate for a 0.04% decline, led by a drop in food.

The benign inflation environment provides President Joko Widodo with a timely election booster as he bids for a second term. The presidential election is set for April 17 with the cost of living seen as a key voter concern.

Across the region, inflation is moderating. Consumer prices in Malaysia fell for the first time in a decade in January, while the Philippines is also set to report a slowdown next week.

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