DBS Group Research expects Indonesian inflation to rise to 4.1% year-on-year in February, driven by a low base and the expiration of the one-time administered price stimulus. While most components should remain low, elevated precious metal prices are driving up personal care costs. The trade surplus is forecast to exceed $3 billion, following a recent US court ruling potentially lowering effective tariffs and supporting exports.
Base effects and metals enhance CPI
“February inflation likely rose to 4.1% y/y, largely reflecting the low base of the same period last year (February 2025: -0.1% y/y).”
“The fading impact of one-off stimulus measures implemented in Q1 2025 should also be visible in the administered price component, which shrank sharply by 9% y/y a year earlier.”
“While most components are expected to remain low, elevated precious metal prices are likely to spill over into the personal care segment, leading to double-digit growth for the fifth consecutive month.”
“Trade data due out on the same day is expected to show a surplus remaining above $3 billion.”
“Recent developments, including the U.S. court ruling, may result in a small reduction in Indonesia’s effective tariff rate, which bodes well for future export performance.”
(This article was created with the facilitate of an artificial intelligence tool and has been reviewed by an editor.)
