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June CPI: Reflection of demand slowdown

Indonesia’s inflation of 0.54% was subdued, lower than our and market consensus’ expectations, reflecting weak demand on the ground. Staple foods CPI remained as the highest contributor at 1.60% m-m while all components continue to rise, including processed foods at 0.55%, housing at 0.23%, clothing at 0.28%, health at 0.32%, education at 0.07% and transportation at 0.11%. On a y-y basis, inflation rose to 7.26%, also lower than our and consensus estimate. Outside of staple foods, pricing on home rentals and salaries of domestic helpers resulted in higher inflation while air tickets experienced some price declines.

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