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Trade Outlook
July 2019 Inflation Outlook: Ticking Down
July 29, 2019 08:15

Since the seasonal impact from Idul Fitri is over, demand for domestic goods and services is expected to slow. This will dampen inflationary pressures on a monthly basis, following the 0.55% mom increase in prices in June 2019.

Prices of goods at the wholesale level have edged up at a slower pace. In turn, this should be reflected in July’s retail prices. On a monthly basis, the wholesale prices for domestic goods and manufacturing goods rose by 0.8% and 0.4%, respectively. The WPI for imported goods was stable (+0.4%) although it declined for mining products (-0.3%).

Prices in the foodstuffs, prepared foods, clothing and transportation components will return to normal in July. Compared to the previous month, most prices of basic foodstuffs such as chicken meat, beef, onions, garlic, cooking oil and sugar declined. However, prices of rice and chilis still increased. Gold prices fell 1.2% after increasing 8.2% in June. Some pressure on prices may come from higher educational costs due to the start of the new school year.

In our estimate, inflation will reach 0.26 percent MoM in July 2019, translating into YoY inflation of 3.26 percent.