Indonesia June CPI rises to 5.9%; below consensus | Sector data
(Insider Stories) - Indonesia’s headline inflation accelerated in June, but was below consensus forecasts.
The consumer price index - the country’s main inflation gauge - rose 5.9% from a year earlier, data from the Central Statistics Agency show, a quicker pace than the 5.47% on-year increase in May, but below a median forecast of 6.1% in a Dow Jones poll of eight economists.
Month on month, the CPI increased 1.03%, compared with a 0.03% deflation in May and below a 1.24% increase forecast by six of the economists polled by Dow Jones.
Core inflation, which strips out volatile prices and prices controlled by the government, was 3.98% on year compared with 3.99% in May.
The quicker pace of inflation comes after the government in late June increased subsidized gasoline and diesel prices by 33% in order to constrain fuel consumption and limit the subsidy burden on the state budget. The move is expected to bump the headline inflation rate up to around 7.2% - however despite public protests against the increase, the government has pledged cash assistance to 5.5 million poor families, and market watchers have hailed the price increase as a necessary evil, as it will limit the budget damage and narrow a balance-of-payments deficit swollen by oil imports which has weakened the rupiah and led to a deterioration in macroeconomic conditions.
