Producer Price Index (PPI) – 2Q 2018

• Inflationary pressure intensified at producer level in 2Q18. The Producer Price Index (PPI) inched up to 138.5 from 138.4 (+0.03% Q/Q), boosted by PPI in both Transportation (+2.6% Q/Q) and Mining & Quarrying (+1.15% Q/Q). Agriculture was the only sector that saw deflation (-1.7% Q/Q).
• On annual basis, PPI accelerated to 3.8% from 3.4% in previous quarter mainly due to lower base effect. Mining & Quarrying led the way with 14% followed by Agriculture (+2.9%) and Manufacture (+2.6%).
• It is no surprise that inflation in Manufacture has been on a rise as manufacturing companies continue facing intense cost pressures amid strengthening USD/IDR and steeply higher energy prices.