Indonesian inflation data expected

Indonesia’s Central Agency on Statistics will today release the country’s inflation rate for July, which is expected to reach a

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Photo: REUTERS/Kham

Indonesia’s Central Agency on Statistics will today release the country’s inflation rate for July, which is expected to reach a 20-year low of 1.6%.

After recovering from a relative spike in 2014, Indonesia’s inflation remained fairly constant but has declined since February. Social distancing measures and widespread lockdowns have led to contractions in the first half of 2020, with subdued spending and demand for Indonesian imports slowing the recovery of consumer prices.

Though many businesses began re-opening in June, ineffective government spending packages, record demand for social handouts and low consumer spending will likely push July’s inflation rate even lower. Last week, the head of Indonesia’s economic recovery task force urged citizens to initiate a return to economic normality, illustrating the depth of Indonesia’s financial predicament even as the country confirmed over 50,000 new COVID-19 cases in July. The spike was particularly prominent in Jakarta, which consequently extended its transitional period from large-scale social restrictions until August 13.

Despite the government’s efforts to accelerate economic recovery, expect inflation to continue to decline in the coming months as consumer spending remains sluggish. Unemployment will likely continue to plague the domestic economy, especially the informal sector, and could extend Indonesia’s recession into 2021.

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