Inflation Eases Further in May 2020; Bank Indonesia Likely to Cut Interest Rates This Month

Moderating for the third month in a row, Indonesia’s headline Consumer Price Index (CPI) increased 0.07% month-on-month (MoM) in May 2020, driven by further easing in food inflation, according to media reports.

This increase in the CPI was driven by higher transport prices (up 0.87% MoM) and health costs (+0.27% MoM), with other major components of the CPI recording marginal increases.

However, food, beverage and tobacco declined 0.32% MoM in May 2020, contributing to the easing up of the overall CPI.

According to ANZ Research, lower volatility, weak growth, and easing downward pressure on the IDR should lead to an interest rate cut this m...