Fasting Month Preparation Drives Inflation In May

Economic Research	5 June 2017
Indonesia
Economic Update
Fasting Month Preparation Drives Inflation In May The headline inflation rate inched up to 4.3% YoY in May. This was attributed mainly to rapid increases in the price of fresh food and cost housing & utilities. For the full year, we forecast headline inflation to pick up to 4.2% in 2017, from +3.5% last year. This is on account of: 1. Higher energy prices as a result of a pick-up in crude oil prices; 2. Electricity tariff hikes; 3. Modest pick-up in volatile food prices. Key policy rate to be maintained. As inflation would likely continue to be manageable, we expect Bank Indonesia (BI) to keep its monetary and macro-prudential policies stable. Economist:  Rizki Fajar| +6221 2970 7065
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