Indonesia Macro Update - INF 02 Jan 2025
KBVS MACRO UPDATE
Thursday, 2 January 2025
2024: Indonesia Records the Lowest Annual Inflation in History
As anticipated, the Dec ‘24 headline inflation rose to 0.44% MoM or 1.57% YoY (Cons: 0.46% MoM or 1.58% YoY; KBVS: 0.48% MoM or 1.58% YoY; Prev: 0.30% MoM or 1.55% YoY). It is worth noting that the 1.57% YoY headline inflation in 2024 marks Indonesia's lowest annual inflation rate on record since the BPS began measuring inflation in 1979.
Despite the seasonal uptick in Dec ‘24, inflation is expected to ease in Jan ‘25. This decline aligns with typical patterns of restrained spending ahead of the fasting month and Eid celebrations in Feb and Mar ‘25. On the other hand, the persistently low inflation rate, combined with Bank Indonesia’s unchanged policy rate since Sep ‘24, indicates significant capital flight to quality within Indonesia's financial markets—a trend that appears unlikely to reverse in the near term.
Regards,
KBVS Research Team