[JAKARTA] Indonesia’s headline inflation hit an eight-month peak in April, the statistics bureau said on Friday (May 2), higher than expected, as hefty two-month discounts on some electricity prices ended.
The consumer price index in South-east Asia’s largest economy accelerated to 1.95 per cent year on year last month versus analysts’ forecast of 1.60 per cent in a Reuters poll and accelerated from 1.03 per cent in March.
April inflation returned to within the central bank’s target range of 1.5 per cent to 3.5 per cent for the first time this year after months of below-target readings.
The April inflation was driven by prices of gold jewellery, home rents and some food items, the bureau said at a press conference.
Last month, month-to-month inflation in gold jewellery jumped to its highest level in more than four years at 10.52 per cent, data from the bureau shows.
There has been a spike of gold purchases in Indonesia due to concern over the economy and the depreciation of rupiah, which hit a historic low last month.
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Inflation had been low since the start of 2025 largely due to discounts in some electricity tariffs, which applied only in January to February.
The impact of the discount dissipated by April, the bureau said.
The soft inflation, coupled with concerns over the weaker economic outlook amid global trade tensions, may push Bank Indonesia (BI) to cut its policy rates, some analysts noted.
“Especially if the upcoming Q1 2025 GDP, released next Monday, prints below 5 per cent,” Bank Danamon economist Hosianna Situmorang said, noting a contraction in PMI manufacturing data in April.
Indonesia’s first-quarter GDP growth is seen at 4.91 per cent, according to a Reuters poll.
BI expects this year’s growth to be slightly below the mid-point of its outlook range of 4.7 to 5.5 per cent. The government has set a higher GDP growth this year at 5.2 per cent versus 5.03 per cent in 2024.
However, BI may be forced to keep its focus on safeguarding the rupiah which last month hit a historic low against the US dollar. REUTERS
