Inflation Outlook: At an Inflection Point
Key Takeaways
• Cooking oil prices are still stubbornly high hovering above IDR20,000/kg and will contribute to inflation during Ramadhan festive day.
• We expect Apr-22 inflation to increase +0.79% MoM/+3.31% YoY, higher than Bank Indonesia’s estimate.
• Looking ahead, the inflation figures may be showing an upside risk given that PPI and WPI have already jumped higher than CPI.
• Furthermore, the widened gap between actual oil prices and government macro assumptions is likely to trigger another follow-on fuel price increase.
• Our model showed that for 5-10% increase in gasoline and fuel price including LPG would add +0.3-0.6% monthly inflation.
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