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Danamon Economic & Market Research
1
August CPI Inflation
Release Date: 1 September 2008
Aug-08
*Jul-08 Jun-08
Aug-07
Headline CPI (% chg y-o-y)
11.84
11.90
11.03
n/a
Headline CPI (% chg m-o-m)
0.50
1.37
2.46
0.56
Headline CPI (% chg y-t-d)
9.27
8.85
7.37
n/a
Source: BPS, CEIC, Bloomberg, *Danamon Estimates
Commodities vs. Housing Fuel
•
Year on year inflation may have eased to 11.84% in August, from
11.90% last month. In our view, there are two non-seasonal factors
that can impact this month’s figures.
•
On one hand, commodity prices have softened and we believe this
may help soften inflation. The 25% decline in crude palm oil prices
since June appears to have been followed by an ease in the
domestic prices of cooking oil. Declining gold prices should also
have a positive impact.
•
On the other hand, housing-fuel prices may have still gone up,
driven by LPG and probably kerosene prices. This follows the
continued withdrawal of subsidized-kerosene supply from certain
areas in Java, and adjustments in LPG prices toward free-market
levels. This rise in housing fuels could also exert upward pressure
on food and processed food prices.
•
The adjustments in housing-fuel prices still pose a risk to inflation
in the medium-term; furthermore BI is apparently concerned over
demand-pull pressures and strong loans growth. We believe
policymakers will raise the policy rate by 25bps in September to
9.25%.
We expect y-o-y inflation to have eased to 11.84% in
August, from 11.90% last month.
Chart 1. CPI Inflation and SBI rates
CPO prices have declined since June, by around 25%.
This has been followed by domestic prices of cooking oil.
Chart 2. Palm oil, Rotterdam
Aug-05 Aug-06 Aug-07 Aug-08 20 18 16 14 12 10 8 6 4 BI rate
CPI (% y-o-y) %
Forecast
Source: CEIC, Danamon Estimates Source: Bloomberg
27 August 2008
Helmi Arman
Economist / Bond Strategist
helmi.arman@danamon.co.id Anton Gunawan Chief Economist anton.gunawan@danamon.co.id Anton Gunawan Chief Economist anton.gunawan@danamon.co.id Anton Hendranatta Statistician Anton.hendranatta@danamon.co.id
Please see the disclaimer and important information on the
Danamon Economic & Market Research
2
Indonesia: Selected Economic Indicators
2005 2006 2007
2008E*
2009E*
National Accounts
Real GDP (% y-o-y)
5.7
5.5
6.3
6.0
6.3
Domestic demand ex. inventory (% y-o-y)
5.8
3.7
6.0
7.2
7.0
Real Consumption: Private (% y-o-y)
4.0
3.2
5.0
5.3
5.5
Real Gross Fixed Capital Formation (% y-o-y)
10.8
2.9
9.2 12.5
10.6
GDP (US$bn) — nominal
287
364
433
497
572
GDP per capita (US$) — nominal
1,308
1,641
1,925
2,183
2,480
Open Unemployment Rate (%)
10.3
10.3 9.8
8.0 7.1
External Sector
Exports (% y-o-y, US$)
19.7
17.7
13.2
7.0
8.0
Imports (% y-o-y, US$)
24.0
5.8
22.0
12.0
12.0
Trade balance (US$bn)
28.0
39.7
39.6
39.1
38.9
Current account (% of GDP)
0.1
3.0
2.5
1.6
1.1
External debt (% of GDP)
48
37
30
26
23
International
Reserves-IRFCL
(US$bn)
34.0 42.6 56.9 64.0 70.0
Import
cover
(months)
4.3 4.5 6.2 5.8 5.3
Currency/US$ (period average)
9,711
9,167
9,139
9,215
9,275
Other
BI policy rate (% period average)
9.0
11.9
8.6
8.7
9.5
Consumer prices (% period average)
10.5
13.1
6.4
9.8
9.5
Fiscal balance (% of GDP; FY)
-0.5
-1.0
-1.3
-1.5
-1.6
S&P's Rating - FCY
B+
BB-
BB-
BB-
BB
Danamon Economic & Market Research
3
Economic and Market Research
Anton H. Gunawan
Chief Economist
+62 21 5799-1466
anton.gunawan@danamon.co.id
Helmi Arman
Economist / Bond Strategist
+62 21 5799-1563
helmi.arman@danamon.co.id
Anton Hendranata
Econometrician
+62 21 5799-1563
anton.hendranata@danamon.co.id
PT Bank Danamon Indonesia, Tbk.
Menara Bank Danamon
Jalan Prof. Dr. Satrio Kav. E IV #6
Mega Kuningan, Jakarta 12950
INDONESIA
***
Facs: +62 21 5799-1048
ANALYST CERTIFICATION
We hereby certify that all of the views expressed in this research report accurately reflect our personal views about any and all of the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or views in this report.