Indonesia’s annual inflation hits 3.05% in March

Indonesia’s annual inflation rate in March rose to 3.05 per cent, the highest since August 2023, driven by increased demand during Ramadan, Reuters reported on Sunday, citing, data from the statistics bureau.

Economists had forecast a rate of 2.91 per cent for March, compared to February’s 2.75 per cent. The inflation rate remained within the central bank’s target range of 1.5 per cent to 3.5 per cent for 2024.

Price pressures were attributed to stronger demand during Ramadan, which began on March 12 and is observed by Indonesia’s large Muslim population.

Volatile food prices increased by 10.33 per cent year-on-year in March, with rice, meat, and chicken contributing significantly. Core inflation was 1.77 per cent, slightly higher than economists’ expectations.

Despite higher rice stocks from March harvests, retail prices remained about 20 per cent above the average price in March 2023.

The inflation data, coupled with a smaller trade surplus in February, may lead the central bank to maintain interest rates in the near term. Analysts anticipate no rate cuts until the second half of 2024.

Economists suggest that the rise in inflation is temporary, and a slowdown is expected in April due to upcoming harvests.