snapshot indonesia's cpi and trade august 2013

8/14/2019 Snapshot Indonesia's CPI and Trade August 2013

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Changes in Consumer Price Index (Percent) Main Driven of Inflation by Component

August 2013Economic and Markets ResearchSnapshot CPI and Trade Report

Accelerating Inflation, Widening Trade Deficit

CPI ReviewIndonesias July CPI surged more than expected to 3.29%mom with annual inflation reaching 8.61%yoy from

5.90%yoy in June. The inflationary surge is explained largely by the non-fundamental components of administered

prices and volatile foods. Higher inflation in administered prices came mainly in response to the governmen

decision on 22 June 2013 to raise subsidized fuel prices by 33.33% in average, in addition to soaring fue

consumption and declining oil production. The impact of the fuel price adjustment was partially reflected in

previous month and further inflationary pressure from fuel price hike already surfaced in July. Moreover, the

significant rise in inflation also represented the second round effect of the fuel price hike and rising transportation

cost. In the administered prices category, inflation reached 15.10%yoy, having spiked from 6.70%yoy in the

previous month. In additional, seasonal effects of Ramadan also contributed largely to surging volatile food

inflation. Volatile foods inflation was up to 6.07%mom compared to 1.18%mom in the previous month. In July 2013

core inflation was recorded at 4.44%yoy, climbed from 3.98%yoy in the previous month. The higher core inflation i

driven by seasonal factor of the onset of the new academic year.

The most important contributor with the surging inflation in July 2013 was the transportation component with

inflation running at 9.60%mom compared to 3.80%mom in June. Commodities which contribute to rising inflationin this component are fuel price and transportation tariff. Furthermore, foodstuffs component, driven by soaring

prices of shallot, chicken, fish, chili, eggs and rice, contributed inflation at 5.46%mom. Meanwhile, clothing

component contributing 0.09%mom on deflation was driven by declining gold jewelry prices.

Trade ReviewIndonesias June trade deficit widened to deficit of USD 847 million compared to deficit of USD 527 million in May

2013. Export in June was weakening to USD 14,741 million (down by 4.58% from a year earlier) from USD 16,133

million in May 2013. This worsening export performance was triggered by declining both oil & gas exports with

pace -4.99%yoy and dropping non-oil and gas exports by -4.44%%yoy to USD 11,984 million from USD 13,207 million

in the previous month data. The deteriorating non-oil and gas export was mainly triggered by declining export o

mineral ores (-43.15%mom) and mineral fuel (-15.49%mom).

On the other hand, the import in June 2013 was at USD 15,587 million from revised USD16,661 million. The decliningimport is driven by falling non-oil & gas import to USD 12,058 million from USD 13,225 million one month earlier. The

falling non-oil and gas import was triggered by dropping import of iron/steel and vehicle/automotive parts by

25.43%mom and -25.36%mom.

Based on type of goods, imports of capital goods dropped by 9.52%mom to USD 2,570 million while imports of raw

material declined by 5.82%mom to USD 11,803 million. Moreover, imports of consumer goods fell by 5.73%mom to

USD 1,213 million in June 2013.

Market ImplicationFX MarketsWidening trade balance deficit in June of USD 847 million has lead trade balance deficit of USD 3.3 billion in H1

2013. Furthermore, current account deficit is expected to be worsening in Q2/2013 to 3.5% of GDP from 2.4% o

GDP in Q1/2013, as predicted by Bank Indonesia. Considering worsening current account deficit and surging

inflation in July due to fuel price hike and Ramadan season, we expect IDR would be still under-pressure againsUSD in the near term. However, we also expect the IDR would be appreciated to 10,100 level by the end of yea

as expectation of improving external balance and re-entering capital inflows.

Bond MarketsThe foreign investor would be concerned on the spike of inflation in July since they still wait and see to re-ente

to IDR government bond market. Nevertheless, based on latest data from Directorate General of Deb

Management MoF, Bank Indonesia tends to enter IDR bond market by IDR 32 trillion compared to end of June in

order to stabilize the bond market. We expect that improving condition in IDR bond market triggered by BI

measures would not be sustainable. Going forward, we expect bond market would be still under-pressure in the

near term.


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Year on year Inflation Indonesias Trade Performance

Year on Year Growth of Indonesias Exports Year on Year Growth of Indonesias Imports

Source: BPS & BII Economic Research Source: BPS & BII Economic Research

Indonesia's Trade Performance (Billions US$)

M ay-13 Jun-13 Jul-13 M ay-13 Jun-13 Jul-13 2011 2012 2013

FOODSTUFF -0.83 1.17 5.46 11.14 10.70 14.81 0.77 4.05 13.03

PREPARED FOOD 0.35 0.67 1.55 5.60 5.79 6.49 2.56 3 .90 4 .27

HOUSING 0.75 0.21 0.44 4.71 4.55 4.84 2.15 1.97 3.44

CLOTHING -1.22 -0.29 -0.09 0.54 -0.14 -0.41 3.07 1.18 -3.73

MEDICAL CARE 0.23 0.23 0.40 3.24 3.26 3.23 3.14 1.86 2.19

EDUCATION 0.06 0.04 0.69 4.41 4.34 4.47 1.99 1.06 1.31

TRANSPORTATION 0.05 3.80 9.60 1.64 5.48 15.25 1.07 1.03 13.93

GENERAL -0.03 1.03 3.29 5.47 5.90 8.61 1.74 2.50 6.75

Food and Non-Food

FOOD -0.33 0.96 3.80 8.71 8.56 11.20 1.54 3.98 9.22

NON-FOOD 0.20 1.08 2.89 3.22 4.09 6.81 0.11 0.61 1.65

Source : BPS & BII Econom ic Research

Y-on-Y changes YTD (Jan-Jul)M-on-M changes Component Change Drivers Contrib

(%) (%)

Foodst uf fs 5. 46 Re d oni on, chi ck en m eat , f ish, chi li , r ice, eggs, beef , pot at oes, t om at oes, red pepper s, 1. 36

salted fish, instant noodles, chicken alive, goat meat, spinach, long beans, banana,

watermelon, t omato fruit, and coconut

Prepared foods, beverages and cigarettes 1.55 Fried chicken, greasy pastries, noodles, soup, slurry, cake, martabak, satay, 0.28

cigarettes, and filter cigarette

Housing 0.44 Brick, household fuels, labor wages, housing contracts, housing rents, 0.10

and servant wagesClothing -0.09 Gold and jewelry -0.01

Medical Care 0.40 Body care and cosmetics sub-sector 0.02

Ed ucat io n, rec re at io n an d sp or ts 0 .6 9 Tu tion f ee (presch oo l, p rima ry sch oo l, j un io r high sch oo l, a nd col le ge /u nive rs it y) 0 .0 4

Transportat ion and Communicat ions 9.60 Gasoline, transport fares in the city, inter-city freight tariff, air freight tariff, and diesel oil 1.50

Total 3.29

Source : BPS & BII Economic Research

0

4

8

12

16

20

24

Mar-02

Jul-02

Nov-02

Mar-03

Jul-03

Nov-03

Mar-04

Jul-04

Nov-04

Mar-05

Jul-05

Nov-05

Mar-06

Jul-06

Nov-06

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Jul-09

Nov-09

Mar-10

Jul-10

Nov-10

Mar-11

Jul-11

Nov-11

Mar-12

Jul-12

Nov-12

Mar-13

Jul-13

(%)

Source: BPS & BII Economic Research

YoY-Inflation (%)

General Food Non Food

-3.0

-2.0

-1.0

0.00

1.00

2.00

3.00

4.00

5.00

-60

-30

0

30

60

90

120

Aug-0

2

Jan-03

Jun-03

Nov-03

Apr-04

Sep-04

Feb-05

Jul-05

Dec-05

May-0

6

Oct-06

Mar-0

7

Aug-0

7

Jan-08

Jun-08

Nov-08

Apr-09

Sep-09

Feb-10

Jul-10

Dec-10

May-1

1

Oct-11

Mar-1

2

Aug-1

2

Jan-13

Jun-13

US$ byoy (%)

Trade Performance

Trade Balance Export s Growt h, y-o-y Import s Growth, y-o-y

-90

-60

-30

0

30

60

90

120

150

Aug-02

Jan-03

Jun-03

Nov-03

Apr-04

Sep-04

Feb-05

Jul-05

Dec-05

May-06

Oct-06

Mar-07

Aug-07

Jan-08

Jun-08

Nov-08

Apr-09

Sep-09

Feb-10

Jul-10

Dec-10

May-11

Oct-11

Mar-12

Aug-12

Jan-13

Jun-13

yoy (%)

Exports Performance (yoy growth)

Total exports Oil & gas exports Non-oil & gas exports

-80

-30

20

70

120

170

Aug-02

Jan-03

Jun-03

Nov-03

Apr-04

Sep-04

Feb-05

Jul-05

Dec-05

May-06

Oct-06

Mar-07

Aug-07

Jan-08

Jun-08

Nov-08

Apr-09

Sep-09

Feb-10

Jul-10

Dec-10

May-11

Oct-11

Mar-12

Aug-12

Jan-13

yoy (%)

Imports Performance (yoy growth)

Total import Oil & gas import Non-oil & gas import


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Indonesia's Imports include Trade Zone by Type of Good (Mil US$)


January February March April May June 2012 2013

Export Total Export 15.38 15.02 15.02 14.76 16.13 14.74 96.96 91.05

Oil & Gas 2.65 2.57 2.93 2.45 2.93 2.76 20.17 16.28

Total excl. oil/gas 12.72 12.45 12.10 12.31 13.21 11.98 76.79 74.77

Import Total Import 15.45 15.31 14.89 16.46 16.66 15.59 96.45 94.36

(incl. Trade Zone) Oil & Gas 3.97 3.64 3.90 3.63 3.44 3.53 21.44 22.11

Total excl. oil/gas 11.48 11.67 10.98 12.83 13.23 12.06 75.01 72.26

Balance Total incl. oil/gas -0.07 -0.30 0.14 -1.70 -0.53 -0.85 0.51 -3.31

(incl. Trade Zone) Oil & Gas -1.31 -1.07 -0.97 -1.18 -0.51 -0.77 -1.27 -5.82

Total excl. oil/gas 1.24 0.78 1.11 -0.53 -0.02 -0.07 1.78 2.51

Y on Y Growth

(percent)

Export Total Export -1.25 -4.32 -12.91 -8.73 -4.14 -4.54 -1.68 -6.09

Oil & Gas -15.56 -23.48 -16.00 -31.14 -21.44 -4.95 3.00 -19.26Total excl. oil/gas 2.37 0.89 -12.13 -2.41 0.78 -4.44 -2.84 -2.63

Import Total Import 6.15 3.00 -8.81 -2.80 -2.21 -6.82 15.40 -2.16

(incl. Trade Zone) Oil & Gas 31.35 4.29 -2.65 -11.92 -0.19 5.22 11.42 3.11

Total excl. oil/gas -0.44 2.61 -10.82 0.13 -2.72 -9.83 16.58 -3.67

M on M Growth

(percent)

Export Total Export -0.12 -2.34 0.06 -1.76 9.30 -8.63Oil & Gas -10.56 -3.25 14.05 -16.27 19.35 -5.81

Total excl. oil/gas 2.37 -2.15 -2.83 1.76 7.30 -9.26

Import Total Import -0.85 -0.89 -2.78 10.59 1.20 -6.44

(incl. Trade Zone) Oil & Gas 7.03 -8.16 7.15 -7.01 -5.34 2.72

Total excl. oil/gas -3.30 1.63 -5.88 16.84 3.05 -8.82

YTD (Jan-Jun)2013

Jan-Jun Share of Impo

Category May Jun M-o-M growth Jan-Jun Jan-Jun growth (Y-o-Y) Jan-Jun 2013

2013 2013 (%) 2012 2013 (%) (%)

Import Total 16660.5 15587.3 -6.44 96449.2 94361.9 -2.16 100.

Consumer Goods 1286.4 1212.7 -5.73 6749.8 6412.1 -5.00 6.

Raw Material 12532.8 11803.9 -5.82 70277.1 72172.9 2.70 76.

Capital Goods 2841.3 2570.7 -9.52 19422.3 15776.9 -18.77 16.

Value CIF (US$ mn) Value CIF (US$ mn)


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snapshot indonesia's cpi and trade august 2013

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