DBS Group Research expects Indonesia’s March CPI inflation to remain steady at 4% year-on-year, slightly below February’s 4.8% but at a faster monthly pace. Analysts emphasize the impact of higher energy prices and holiday demand, as well as the base effect. Strategic options include maintaining retail fuel prices through fiscal savings, although a prolonged conflict could force price increases or subsidy cuts.

CPI held on energy and holidays

“March inflation is expected to remain steady at 4% year-on-year compared to 4.8% the previous month, at a faster monthly pace than previous averages, reflecting the initial impact of elevated energy prices and festival-induced price pressures.”

“Underlying effects will also maintain a stable trend.”

“The quickest line of defense would probably be to keep retail fuel prices unchanged and use budget savings to offset higher costs.”

“However, if the conflict continues and fuel prices remain high in the second quarter, the likelihood of price increases or subsidy cuts will increase.”

(This article was created with the lend a hand of an artificial intelligence tool and has been reviewed by an editor.)