ECONOMIC PULSE: Price Indices and Manufacturing PMI July 4, 2017

Entering the second half of 2017, the high-frequency data gave us mixed results on the current state of Indonesia’s economy. We have yet seen any near-term inflationary pressure on neither the consumer level nor the wholesale level. Meanwhile, at the end of 1H17, activities in manufacture slipped back into contraction for the first time in four months.Indonesia’s annual inflation rate accelerated slightly in June as increased consumption during festivities surrounding the Muslim fasting month of Ramadan pushed up prices. The Consumer Price Index (CPI) rose 4.37% (Y/Y), the highest increase since March 2016, from 4.33% (Y/Y) in May. On a monthly basis, the inflation rate was 0.69%, faster than May’s 0.39%.

Indonesia’s annual inflation rate accelerated slightly in June as increased consumption during festivities surrounding the Muslim fasting month of Ramadan pushed up prices. The Consumer Price Index (CPI) rose 4.37% (Y/Y), the highest increase since March 2016, from 4.33% (Y/Y) in May. On a monthly basis, the inflation rate was 0.69%, faster than May’s 0.39%.Although growth can be seen across the board in almost every group, Inflation last month was particularly attributed to rising transportation tariffs, rising electricity prices and higher prices of clothes.

Although growth can be seen across the board in almost every group, Inflation last month was particularly attributed to rising transportation tariffs, rising electricity prices and higher prices of clothes. Meanwhile, the rise of food prices was limited due to steps were taken by the government to limit any increases.

The fastest growth was registered by Transportation, Communication and Financial Services group (+1.27% MtM and 5.80% Y/Y). Transportation sub-group jumped 1.89% as operators raised ticket charges during the peak season, when millions of Indonesian Muslims return to their hometown to celebrate Eid al-Fitr. Auto parts and Accessories sub-group rose 0.24%.Housing, Water, Electricity, Gas and Fuel group was the second biggest contributor (+0.75% MtM and 6.18% Y/Y) on the back of rising electricity tariff. Basic Food rose 0.69% (+2.43% Y/Y) as a number of commodities; chicken meat, beef, rice, spinach, potato and string bean just to name a few, experienced price hike.

Housing, Water, Electricity, Gas and Fuel group was the second biggest contributor (+0.75% MtM and 6.18% Y/Y) on the back of rising electricity tariff. Basic Food rose 0.69% (+2.43% Y/Y) as a number of commodities; chicken meat, beef, rice, spinach, potato and string bean just to name a few, experienced price hike.Processed Food, Beverage and Tobacco or FB&T rose 0.39% (+4.37% Y/Y) while Clothing and

Processed Food, Beverage and Tobacco or FB&T rose 0.39% (+4.37% Y/Y) while Clothing and jewelry prices increased 0.78% (+2.75% Y/Y).

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