Inflation registered at 0.92% mom in Dec10, in line with our estimate (0.94% mom), but higher than consensus estimate (0.67% mom). Overall, the consumer price rose by 6.96% yoy in 2010, above the central bank's upper end target.
Raw food prices still dominated Dec10 inflation, with the price of rice, chilis, and cooking oil contributing almost 70% of the on-month inflation. Meanwhile, core inflation was stable at 4.28% yoy in Dec10, mostly on higher jewelry, housing rent, and transportation costs.
Despite sharp increase in the headline figure, stable core inflation and concerns over the adverse impact of capital flows, we think, will provide arguments for the central bank to keep the benchmark rate unchanged at 6.5% in the next governor board meeting (Wednesday 5/1), to our opinion.
However, this inflation showing should serve as a wake-up call for the central bank to be more cautious, as we expect inflation to continue trending up in the next few months. Besides unfavorable weather that may keep food inflation high, strong domestic demand would start to affect inflation. Thus, we expect the first rate hike will be delivered in 2Q11 by a total 50bps to 7% and stay flat for the rest of the year.
Indonesia’s total exports broke another record high reaching US$15.4bn, up by 42.3% yoy in Nov10, partly supported by higher commodity prices. Imports, on the other hand grew by 48.3% yoy, which brought trade surplus of US$2.3bn during the month vs. US$2.1bn a month earlier.
Tidak ada komentar:
Posting Komentar