Bank Indonesia Press Release: March Inflation and February Trade Balance
The rate of inflation in March 2014 demonstrated that the ongoing downward trend persists. In the reporting month of March 2014, inflation was recorded at 0.08 percent (month-to-month) or 7.32 percent (year-on-year), down from the rates recorded in the previous two months at 1.07 percent (mtm) or 8.22 percent (yoy) in January and 0.26 percent (mtm) or 7.75 percent (yoy) in February. The declining inflation trend is further evidenced by a lower rate recorded in March 2014 than the historical average over the past six years at 0.24 percent (mtm).
Lower inflation in March 2014 was ascribed to rupiah exchange rate control that curtailed core inflation at around 0.21 percent (mtm), down from the rates that were posted in January and February 2014. The decelerating rate of inflation also stemmed from deflation of volatile foods due to a correction in the prices of mixed vegetables, chilli, eggs and chicken meat. Conversely, inflationary pressures on administered prices escalated moderately due to the imposition of a surcharge on airfares that came into effect on 26 February 2014.
Bank Indonesia considers the rate of inflation reported in March 2014 as favourable to the achievement of the inflation target of 4.5±1 percent in 2014 and 4.0±1 percent in 2015. Nonetheless, Bank Indonesia will continue to remain vigilant of a range of risks, like a potential hike in the prices of food as many regions enter the dry season as well as indications of a possible low-intensity El Nino episode forecast for August 2014.
Inflation in Indonesia:
| Month | Monthly Growth 2013 |
Monthly Growth 2014 |
| January | 1.03% | 1.07% |
| February | 0.75% | 0.26% |
| March | 0.63% | 0.08% |
| April | -0.10% | |
| May | -0.03% | |
| June | 1.03% | |
| July | 3.29% | |
| August | 1.12% | |
| September | -0.35% | |
| October | 0.09% | |
| November | 0.12% | |
| December | 0.55% | |
| Total | 8.38% | 1.41% |
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | |
| Inflation (annual percent change) |
9.8 | 4.8 | 5.1 | 5.4 | 4.3 | 8.4 |
Source: Statistics Indonesia
Trade Balance February 2014
Indonesia's Balance of Trade (NPI) in February 2014, according to Statistics Indonesia, returned to a surplus thus boosting efforts to bring the current account deficit to a more sustainable level. In the reporting month of February 2014, the trade surplus totalled USD $0.79 billion, after having recorded a deficit of USD $0.45 billion in January 2014.
The trade surplus in February 2014 was credited to a larger surplus in the non-oil & gas account. The trade surplus in the non-oil & gas account swelled from USD $0.60 billion in January 2014 to USD $1.59 billion in the following month due to a contraction in non-oil & gas imports to the tune of 9.1 percent (mtm) in line with Indonesia's moderating domestic demand. Meanwhile, non-oil & gas exports started to improve, with a mere 0.5 percent (mtm) decline reported in February 2014 compared to a whopping 11.60 percent (mtm) decline recorded in the previous month. By component, the contraction of non-oil & gas imports was mainly blamed on negative import growth for 10 leading commodity groups (including machinery and mechanical equipment, machinery and electrical equipment as well as iron and steel), more specifically by 7.8 percent (mtm). The surge in non-oil & gas exports in February 2014 was associated with exports of vegetable oil and coal, which rebounded to achieve growth of 26.1 percent (mtm) and 2.1 percent (mtm) respectively. Conversely, exports of rubber products, machinery and mechanical equipment as well as chemical products slumped.
A reduction in the trade deficit of the oil & gas account helped bolster the overall trade surplus in February 2014. The trade deficit in the oil & gas account shrank from USD $1.05 billion in January 2014 to USD $0.80 billion in February 2014 as a result of strong oil and gas exports that achieved 6.34 percent (mtm) on the back of increased oil lifting in February 2014, totalling 838 thousand barrels per day (bpd). Meanwhile, oil and gas imports slid 2.61 percent (mtm), which was linked to an 11.56 percent (mtm) decline in oil imports during the reporting month.
Looking ahead, Indonesia's trade balance is expected to continue performing positively as the global economy recovers and the prices of export commodities increase. Against this propitious backdrop, Bank Indonesia asserts that the current account deficit will drop to below 3 percent of GDP in 2014 overall.
Indonesia's Trade Balance 2014 (in billion US Dollar):
| 2014 | Export | Import | ||||
| Month | Oil & Gas | Non Oil & Gas | Total | Oil & Gas |
Non Oil & Gas | Total |
| January | 2,50 | 11,97 | 14,47 | 3,55 | 11,37 | 14,92 |
| February | 2,66 | 11,91 | 14,57 | 3,46 | 10,33 | 13,79 |
| Jan-Feb | 5,16 | 23.88 | 29,04 | 7,01 | 21,69 | 28,70 |
Indonesia's Trade Balance 2013 (in billion US Dollar):
| 2013 | Export | Import | ||||
| Month | Oil & Gas | Non Oil & Gas | Total | Oil & Gas |
Non Oil & Gas | Total |
| January | 2,66 | 12,72 | 15,38 | 3,97 | 11,48 | 15,45 |
| February | 2,57 | 12,45 | 15,02 | 3,64 | 11,67 | 15,31 |
| March | 2,93 | 12,09 | 15,02 | 3,90 | 10,99 | 14,89 |
| April | 2,45 | 12,31 | 14,76 | 3,63 | 12,83 | 16,46 |
| May | 2,92 | 13,21 | 16,13 | 3,43 | 13,23 | 16,66 |
| June | 2,80 | 11,96 | 14,76 | 3,53 | 12,11 | 15,64 |
| July | 2,28 | 12,81 | 15,09 | 4,14 | 13,28 | 17,42 |
| August | 2,72 | 10,36 | 13,08 | 3,67 | 9,34 | 13,01 |
| September | 2,41 | 12,29 | 14,70 | 3,72 | 11,79 | 15,51 |
| October | 2,72 | 12,99 | 15,70 | 3,47 | 12,20 | 15,67 |
| November | 2,77 | 13,17 | 15,94 | 3,70 | 11,21 | 15,15 |
| December | 3,41 | 13,58 | 16,98 | 4,22 | 11,24 | 15,46 |
| Jan-Dec | 32,63 | 149,93 | 182,57 | 45,27 | 141,36 | 186,36 |
Source: Statistics Indonesia
Communication Department
Bank Indonesia
Peter Jacobs
Director