Indonesia Inflation Returns to Central Bank Target Range in May

INFLATION - JAKARTA. Indonesia's annual inflation rate eased to 4% in May, matching the upper end of the central bank's target range earlier than expected, data from the statistics bureau showed on Monday.

Inflation in Southeast Asia's largest economy had been above Bank Indonesia's (BI) 2% to 4% target range since June 2022 due to pressures from rising global food and energy prices.

Peaking near 6% in September, inflation has since eased gradually after the central bank hiked interest rates by a total of 225 basis points.

A Reuters poll of analysts had expected May inflation at 4.22%. In April, the rate was 4.33%.

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The core inflation rate, which strips out government-controlled and volatile food prices, eased to 2.66% in May from 2.83% a month before. The poll had expected 2.80%.

At BI's last policy meeting, it had expected headline inflation to ease to within its target in the third quarter, with core inflation seen staying within the same target band throughout the year.