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

JAKARTA :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 per cent, Statistics Indonesia said on Tuesday. That was the lowest since November 2021, LSEG data showed.

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

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

Core inflation, which excludes volatile food prices as well as government-controlled prices, was 2.09 per cent versus 2.03 per cent 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.

BI is likely to cut its policy interest rate to 5.25 per cent by year-end, Myrdal said, rather than 5.75 per cent 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 per cent - hours before a 50 basis point cut in the U.S.