Indonesia’s October inflation eases, but core rate at 15-month high

INDONESIA’S headline annual inflation rate cooled in line with expectations, but its core inflation rate accelerated to its highest in over a year, official data showed on Friday.

The October headline inflation rate was 1.71 per cent, easing from 1.84 per cent in September and close to the median forecast of 1.68 per cent by analysts in a Reuters poll. The October headline rate was the lowest since October 2021.

However, the core inflation rate, which strips out government-controlled prices and volatile food prices, rose to 2.21 per cent, the highest since July 2023, from 2.09 per cent in the previous month. Analysts had predicted the core inflation rate would stay steady.

The headline rate was near the lower end of Bank Indonesia’s (BI) target range of 1.5 per cent and 3.5 per cent. The central bank does not have a target for core inflation, but its officials often say its interest rate policy is also aimed at managing core inflation, which better reflects demand pressures.

BI cut interest rates in September and its governor has said it might further ease monetary policy given inflation is expected to stay low until 2025, but the timing of the next rate cut may depend on global market conditions. REUTERS