Thus, inflationary pressures are still increasing in Indonesia, a trend that started in the fourth quarter of 2021, and it is a trend that is expected to continue in Q3-2022 (which is reinforced by the weak base effect because inflation was quite moderate in Q3-2021).
With an annual headline inflation of 4.94% (y/y) in July 2022, Indonesia is now experiencing its highest inflation rate since October 2015. This also means that the annual inflation rate has exceeded projections (already revised) of the consumer price index of the central country. government and Bank Indonesia (which are set at 4.5% and 4.5-4.6%, respectively). This is quite interesting because it means Indonesian policy makers are also taken by surprise by the pace of inflation. Therefore, this could mean that policymakers become more active in combating rising inflation.
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