Indonesia Macro Update - INF 01 Jul 2024
KBVS MACRO UPDATE
Monday, 1 July 2024
Continued Deflation, a Positive Signal for BI Rate Reduction
As expected, the headline CPI continued its deflationary trend for the second consecutive month, registering at -0.08% MoM or 2.51% YoY in Jun ‘24. Thus we hope will provide additional leverage to encourage a reduction in the BI Rate as the Fed also experiences a decline.
In Jul ‘24, we anticipate that inflation will remain stable. This is considering the ongoing rice harvest season in several areas and the start of the planting season with the onset of rain. Additionally, world oil prices are expected to continue their stable trend, further encouraging a reduction in domestic oil prices, as seen in some private oil company effective Jul 1st, ‘24. However, we are concerned that fears of disasters in some areas if the rainy season is accompanied by heavy rainfall, and the depreciation of the Rupiah may drive imported inflation in raw and auxiliary materials, which could become apparent in the same month.
Regards,
Fikri C Permana - KBVS Research