Indonesia's February inflation predicted to ease to 8%

A slight increase from previous month.

According to DBS, Indonesia's Feb CPI inflation is due on Monday. It is likely to have eased slightly to 8.0% YoY from 8.2% in Jan. BPS, the Statistics Agency, has not released the historical breakdown of the new CPI series. Based on our estimates, the details will not differ too much from the previous CPI series (using 2007 instead of 2012 as the base year).

Here's more:

Among the major components in the CPI basket, only housing/utilities continue to see some upward pressure in prices. Plans for gradual increase in electricity tariffs may sustain pressure going forward. There is also some lagged impact from the sharp depreciation in the rupiah last year.

Food inflation (raw and processed) remains rather elevated, but it has been moving sideways in recent months. Meanwhile, inflation in the transport/communication component is clearly trending downwards. Impact from fuel price hike in Jun13 has pretty much subsided by now.

Taken together, food and transport/communications make up 54.2% of the CPI basket, more than double that of housing/utilities. With inflation in food and transport/communications trending lower, expect CPI inflation to continue easing going forward.