The low base effect combined with holiday demand may push Indonesia's first-quarter inflation rate up to 4%

Industrial Bank economist Wong Xian Yong stated in a report that, due to the low base effect caused by last year’s electricity tariff discounts, Indonesia’s inflation rate in the first quarter may rise. He pointed out that seasonal demand before Ramadan and Eid al-Fitr, combined with a weak rupiah trend, could put short-term pressure on food prices. The overall inflation rate in the first quarter may remain in the high range of 3%-4%, then ease later. Nevertheless, Wong expects the annual inflation rate to stay within the Bank of Indonesia’s target range of 1.5%-3.5%. He believes that government market interventions and sufficient food supplies should help curb price volatility, and expects the Bank of Indonesia to keep policy rates unchanged in February, prioritizing rupiah stability amid global uncertainties and fragile capital flows.