Second year of February deflation

Indonesia has recorded a 0.09 percent month-on-month deflation in February, with a modest year-on-year inflation at 4.42 percent amid lower food and electricity prices.

The 0.09 percent monthly deflation in February was slightly below Bank Indonesia’s (BI) forecast, which previously estimated a 0.13 percent deflation during the month.

The Central Statistics Agency (BPS) recorded a consumer price index (CPI) of 0.42 percent, a fall of 0.09 percent in February, compared to the 0.51 percent CPI seen a month earlier. Monthly core inflation stood at 0.31 percent, while administered price and stood at -0.76 percent.

"Indonesia experienced inflation in February in the years from 2010 to 2014. The decrease in electricity price on Jan. 5 was among the driving factors of the deflation," BPS head Suryamin said at the press conference held in Jakarta on Tuesday.

This was the second time for Indonesia to record deflation in February, he added. Last year, the CPI was -0.36 percent despite a steep increase in the rice price. Inflation stood at 0.3 percent in 2010, 0.13 percent in 2011, 0.05 percent in 2012, 0.75 percent in 2013 and 0.26 percent in 2014.

Suryamin explained that food was the main driver of February's deflation with 0.58 percent of deflation, followed by housing, water, electricity, gas and fuel, which registered a 0.45 percent deflation. Transportation, communications and financial services recorded a deflation of 0.15 percent.

On the contrary, the apparel sector recorded an inflation of 0.64 percent, followed by processed food and tobacco at 0.63 percent, and health at 0.26 percent. Lastly, education, recreation and sports registered a 0.06 percent inflation.

Previously, the central bank predicted that the CPI would fall around 0.13 percent in February, with annual inflation standing at 4.38 percent, within bank central's 2016 inflation target of 3 to 5 percent. (Ayomi Amindoni)

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