Indonesia’s Inflation Eased in September to 3.72%, Weighed by Food Prices

Inflation in Indonesia continued to ease in September as some basic food commodity prices dropped, suggesting full-year inflation will be limited despite a pick up in the first few months of the year.

September’s consumer price index, a gauge of inflation, rose 3.72% compared with the same period a year ago, slowing from August’s 3.82% rise, the official Statistics Agency said Monday. Compared the month before, prices rose 0.13%, after falling 0.07% in August.

The median forecast from a survey of 10 economists by The Wall Street Journal was for 3.70% year-over-year inflation. The median prediction for on-month inflation from seven economists polled was 0.10%.

Inflation was stoked by a 1.03% increase in education costs in September, compared with August. But a 0.53% fall in basic food prices mitigated the impact on headline inflation, the agency added.

Core inflation, which excludes volatile food prices and those determined by the government, picked up to 3.00% compared with a year ago, August’s 2.98%, the first increase in many months, which may indicate an early recovery in consumers’ purchasing power.

Although inflation is likely to continue retreating for the rest of the year, Bank Indonesia isn’t expected to cut interest rates again next month, after two consecutive 0.25-percentage-point cuts recently.