The Statistical Agency will announce Oct09 inflation figure on Monday (11/2), which we expect to come lower than the previous month’s. Inflation may ease to 0.35% mom (2.73% yoy) in Oct09, as seasonal impacts of Ied festive season have diminished.
Food prices would remain the main contributors of inflation, albeit smaller. Core inflation may stay flat around 4.8% yoy, as the second-round effect on the 12kg LPG price increase likely to be limited and the rupiah’s appreciation would help bring inflation down.
Relatively stable food prices, further appreciation in the rupiah, and flat administered prices, particularly as Pertamina scrapped its plan to gradually increase LPG price for the rest of the year, would keep Inflation low. We expect inflation to end slightly below 4% yoy this year, before picking up to 6.3% in 2010.
Accordingly, we think Bank Indonesia will increase the benchmark rate next year, in order to restrain inflation expectation. BI rate may increase by 75bps to 7.25% next year from 6.5% currently, on the back of rising domestic demand and possible increase in administered prices.
Both exports and imports may continue to improve as we expected them to record smaller annual contraction of 13.5% yoy and 20.5% yoy in Sep09, which would bring trade balance to US$1.6bn.
Tidak ada komentar:
Posting Komentar