Indonesia Feb inflation rate beats view on soaring rice, chilli prices

By Thomson Reuters Feb 29, 2024 | 9:29 PM

By Stefanno Sulaiman and Fransiska Nangoy

JAKARTA (Reuters) – Indonesia’s inflation rate was at 2.75% in February, above expectations, bolstered by higher food prices, data from the statistics bureau showed on Friday.

A median forecast of economists polled by Reuters had expected inflation of 2.60%. The rate also accelerated from January’s 2.57% rate.

Bank Indonesia has targeted inflation within a range of 1.5% to 3.5% this year.

Prices of rice, chicken, chili and sugar were among the biggest contributors to February inflation, Statistics Indonesia senior official M. Habibullah told reporters.

According to the national rice price index tracked by the bureau, retail price of rice rose 19.28% in February, compared to the same month last year.

The core inflation rate, which strips out government-controlled prices and volatile food prices, was at 1.68% in February, unchanged from the month before and below market’s prediction of 1.71%.

BI said last week it wants volatile food inflation to be lower than 5% and said the rising food prices will be temporary due to seasonal factor, which has affected supply.

Indonesia’s annual inflation rate has stayed within the central bank’s target range since mid-2023, following BI’s decision to hike interest rates a total of 250 basis points between August 2022 and October 2023.

In February’s meeting, BI Governor Perry Warjiyo reiterated its view that the window to start cutting its interest rates is in second half of 2024, with considerations of inflation and movements in the rupiah’s exchange rate.

(Additional reporting by Stanley Widianto; Editing by Kanupriya Kapoor and Muralikumar Anantharaman)