Indonesia Macro Update - INF 02 Dec 2024
KBVS MACRO UPDATE
Monday, 2 December 2024
The Return of Volatile Foods Inflation
The rise in most expenditure group indices led to the highest monthly Consumer Price Index (CPI) inflation since Apr ‘24, reaching 0.30% MoM or 1.55% YoY in Nov ‘24 (Cons: 0.23% MoM or 1.50% YoY, KBVS: 0.10% MoM or 1.62% YoY, Prev: 0.08% MoM or 1.71% YoY). Meanwhile, the Wholesale Price Index (IHPB) saw inflation of 0.26% MoM or 1.96% YoY (Prev: -0.02% MoM or 1.95% YoY). According to the S&P Global Indonesia Manufacturing PMI, the index rose to 49.6 in Nov ‘24 (Prev: 49.2), but it still indicates that Indonesia's manufacturing PMI has been in contraction territory for five consecutive months.
Looking ahead, the potential for further inflationary pressures remains significant, particularly in Dec ‘24, due to the possibility of ongoing La Nina conditions and concerns over crop failures, coinciding with increased mobility during the school holidays, Christmas, and New Year. However, with annual inflation levels within the lower range of Bank Indonesia's target, we still foresee the likelihood of a BI rate cut in Dec ‘24, under expectation of a stable Rupiah.
Regards,
KBVS Research Team