The latest data from the Central Statistics Agency (BPS) shows that consumer price index (CPI) inflation in Indonesia will decline surprisingly in January 2025. CPI inflation sloped to 0.76% YoY, compared to 1.57% YoY in December 2024. Wow, this is below the consensus expectation that inflation would initially be at the level of 1.88%. What does all this mean for us?
Interesting Monthly Deflation
Interestingly, on a monthly basis, January 2025 recorded deflation of 0.76% MoM, far different from the previous month’s inflation growth recorded at 0.44% MoM. This indicates that there is a significant shift in the consumption and price of goods in the market. This monthly deflation was far beyond expectations, which predicted inflation to be only around 0.32% MoM.
Causes of Deflation: Electricity Tariffs and Discounts
One of the main factors affecting deflation this month is the decline in electricity tariffs. This price reduction made a significant contribution, with the contribution of deflation reaching 1.47 percentage points in the index. This happens at the same time as providing electricity tariff discounts for customers with power up to 2,200 VA. Who would have thought, this government move could make our wallets feel lighter!
Proper Core Inflation
However, core inflation, which includes the prices of goods and services that exclude energy and food, shows a slightly different trend. In January 2025, core inflation will reach 2.36% YoY, higher than the consensus expectation of 2.3%. This suggests that while there is a decline in prices in some sectors, there is stronger price pressure in others.
What Should We Look For?
This certainly raises the question: will this temporary deflation continue or will it actually turn towards inflation? For those of you who invest, this is a signal to evaluate your portfolio. Maybe it’s time to rethink your investment strategy. Remember, the market is always full of surprises!
Conclusion
Seeing the trend of inflation and deflation in Indonesia, we need to keep our eyes and ears open. The deflation that occurs in January 2025 provides a strong signal about how external factors and internal policies can affect our economy. So, what’s your next investment strategy step? See you in the next article!