Indonesia’s inflation picked up to a three-year high last month, on the heels of steady economic growth in the first quarter that was driven by stronger exports.
Consumer prices rose 3.47 percent last month from a year earlier, Statistics Indonesia said yesterday, beating the median estimate for 3.32 percent and near the top end of the central bank’s target range this year.
The high costs of cooking oil and fuel have started to creep in, especially as millions of Indonesians splurge to celebrate the end of Ramadan.
Photo: Bloomberg
GDP in the three months through March grew 5.01 percent from a year earlier. That compares with the median estimate in a Bloomberg survey for a 4.95 percent expansion, and a 0.7 percent drop in the same period last year.
Trade has been a bright spot for Southeast Asia’s largest economy, which has served as a key exporter of coal, palm oil and minerals amid a global shortage in commodities after Russia’s invasion of Ukraine.
After a brief ban on coal shipments at the start of the year to secure domestic supplies, exports shot up to record levels in March.
“Recovery is still in place,” said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp in Singapore. “Despite some headwinds including higher inflation risk, it should stay supported given the stabilization of the COVID-19 risk.”
Indonesian stocks and bonds saw some of the sharpest selling in years as investors returned from a weeklong break amid heightened concern over rising inflation and slowing global growth.
The Jakarta Composite Index slumped as much as 4.6 percent, the steepest drop for the equity benchmark since September 2020, while bonds tumbled, sending yields to the highest in nearly two years.
The rupiah fell 0.4 percent to its weakest in more than nine months, putting the central bank on guard.
The first-quarter GDP numbers put the nation on track to hit its full-year growth target of 4.8 to 5.5 percent, especially now that COVID-19 cases have declined sharply and most virus curbs have been scrapped.
It would also be a crucial data point for the central bank as it assesses the pacing of its exit of monetary accommodation, against the backdrop of brewing price pressures and faster tightening by the US Federal Reserve.
Bank Indonesia is watching core inflation, which accelerated to a two-year high of 2.6 percent last month, in setting its policy and might resort to another hike in the reserve requirement rate first.
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