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Indonesian inflation at 1.84% in September, lowest rate since 2021

Published 10/01/2024, 12:10 AM
Updated 10/01/2024, 02:27 AM
© Reuters. FILE PHOTO: A security member walks as he patrols at Bank Indonesia headquarters in Jakarta, Indonesia, January 17, 2019. REUTERS/Willy Kurniawan/File Photo

By Stefanno Sulaiman and Fransiska Nangoy

JAKARTA (Reuters) -Indonesian prices rose at their slowest rate in almost three years in September as the pace of food-price inflation eased, giving the central bank ample room to loosen monetary policy to stimulate economic growth.

Annual inflation reached 1.84%, Statistics Indonesia said on Tuesday. That was the lowest since November 2021, LSEG data showed.

The figure compared with 2.12% in August and the 2.00% median of analyst estimates in a Reuters poll. It also stayed within Bank Indonesia's inflation target range of 1.5% to 3.5%.

Food prices are the biggest contributor to inflation figures but their rate of growth eased to 2.57% versus August's 3.39%.

Core inflation, which excludes volatile food prices as well as government-controlled prices, was 2.09% versus 2.03% in the poll.

An abundant supply of food material and the government's policy to maintain price stability for strategic commodities will give a lot of "room for BI to loosen its monetary stance," said Maybank Indonesia economist Myrdal Gunarto.

© Reuters. Aman Iskandar, a vendor, 52, sorts tomatoes while waiting for customers at a traditional market, in Jakarta, Indonesia October 1, 2024. REUTERS/Willy Kurniawan

BI is likely to cut its policy interest rate to 5.25% by year-end, Myrdal said, rather than 5.75% as he earlier forecast.

BI last month lowered the rate for the first time in over three years to bolster growth amid slow inflation - by 25 basis points to 6.00% - hours before a 50 basis point cut in the U.S.

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