Economic Update 02 April 2018

Transcription

1 Inflation Update Late harvest pushed annual inflation higher Headline & core inflation Feb 2018 Mar 2018 Est. Cons. Inflation (%, MoM) Inflation (%, YoY) Inflation (%, YTD) Core inf (%, MoM) Core inf (%, YoY) Inflation breakdown, M-M % Source : BPS & Bloomberg Brent oil prices, ICP and Pertamax March inflation slightly below our estimate BPS reported that March inflation was at 0.20% MoM (3.40% YoY), which came above Bloomberg consensus but slightly below our estimates (see table on the left). All sector experienced inflation in March, including food sector which usually had a deflation in March. Core inflation started to slightly pick up in annual basis to 2.67% YoY (0.18% MoM), in line with Indonesia s March manufacturing PMI that remained in expansion territory of 50.7 point. March inflation figure brought YTD inflation at 0.99%. Late harvest brought food price still experienced inflation Chief Economic Minister, Darmin Nasution, statement previously about late harvest in this year already indicated that food price will not experience deflation in March like previous year. The condition was similar with March 2016 condition where late harvest brought food inflation to 0.69% MoM and monthly inflation at 0.19% MoM. In current condition, food inflation (0.14% MoM, 4.24% YoY) was driven by chili, onion and garlic. According to central bank s food price monitor website (hargapangan.id), the average price of red chili increased by 7.2% MoM to Rp43,350/kg while the price of cayenne chili increased by 10% MoM to Rp 47,050/kg the average price of garlic reached Rp /kg or grew 17.4% MoM while red onion price increased 8.9% MoM to Rp 28,000/kg. Rice price deflation(-1.2% MoM Rp 11,950/kg) helped to cool down March inflation. We expect that food price will have downtrend in April as the peak of harvest season will be occurred in this month and bring annual inflation to lower level. Non-subsidized fuel increase effect still limited As global oil price keep its uptrend, Pertamina increased its non-subsidized fuel again at end of March. This time, Pertalite (Ron 90) had its turn as Pertamina increased its price to Rp 7,800/litre (2.6%), making its price has increased by 4.0% from its position in the end of 2017 (Rp 7,500/litre). Previously, Pertamina had increased Pertamax price by 3.5% to Rp8,900/liter in February. However, we s ee that the effect of those prices increase to inflation was still relatively small as BPS only stated that fuel price increase gave 0.04% additional inflation in March, below our estimation at 0.06%. We still see that government is committed to maintain subsidized fuel price at current level which prevent inflation to increase wildly in Non O&G Large Wholesale Price Index slightly increase at 0.49% MoM March s Large Wholesale Price Index (LWPI) for non Oil and Gas increased by 0.49% MoM. Both Mining/quarrying product price and export product price became the main driver of growth as it recorded 0.92% MoM and 1.43% MoM inflation in March respectivly. We see that higher oil and coal price in 2018 became the main driver of the price increase in 1Q18. Import price also increased by 0.52% MoM which in our view correlated with Rupiah depreciation. Agriculture products experienced inflation at 0.44% due to late harvest season and industry sector also recorded 0.14% MoM inflation. Source : CEIC & Bloomberg Maintain our view of 3.5% YoY inflation in 2018 We see that harvest season in April may bring down consumer price to deflation territory (in monthly basis), especially for food price. Annual inflation is expected to move at 2.9% - 3.2% YoY in April and it is still expected to be below 3.5% YoY in 1H18. Government commitment to maintain subsidized fuel and electricity price made us still believe Indonesia s inflation in 2018 may reach 3.5% YoY. There is no need for central bank to change its policy stance this month. Imanuel Reinaldo ext. 820 reinaldoimanuel@ciptadana.com Please see analyst certification and other important disclosures at the back of this report 2

2 Exhibit 1: Food Inflation MoM Late harvest made food price had a unusual inflation in March. Previous late harvest occurred in Source: BPS Exhibit 2: Change of Food Price in March (MoM) Deflation rice price still cannot compensate the inflation in chili, red onion and garlic. Source: hargapangan.id (Bank Indonesia) Exhibit 3: Indonesia Manufacturing PMI Source: Bloomberg Please see analyst certification and other important disclosures at the back of this report 3

3 Exhibit 4: Inflation & policy rate We maintain our view of year end inflation at 3.5%. Source: BI, BPS, Ciptadana Estimates Exhibit 5 : Key macroeconomic indicators Year-end 31-Dec 14A 15A 16A 17A 18F Nominal GDP (Rp tn) 10,543 11,541 12,407 13,588 14,878 Nominal GDP (USD bn) ,015 1,102 GDP/capita (USD) - Nominal 3,530 3,377 3,605 3,877 4,158 Real GDP (%YoY) Private Consumption (%YoY) Government consumption (%YoY) Gross Fixed Capital Formation (%YoY Exports (%YoY) Imports (%YoY) Inflation rate (%YoY) - year end Core inflation rate (%YoY) - year end BI Rate BI 7 Days Reverse Repo Rate - year end Rupiah / US Dollar - average 11,878 13,398 13,473 13,380 13,620 Rupiah / US Dollar - year end 12,440 13,788 13,346 13,555 13,700 Current account as % of GDP Fiscal balance as % of GDP Source: BI, BPS, MoF, Ciptadana estimates Please see analyst certification and other important disclosures at the back of this report 4

4 HEAD OF RESEARCH ANALYST ANALYST Arief Budiman Erni Marsella Siahaan, CFA Yasmin Soulisa Strategy, Automotive, Heavy Equipment, Banking Property, Plantations Construction, Shipping T ext 919 T ext 799 T ext 819 E siahaanerni@ciptadana.com E soulisayasmin@ciptadana.com E budimanarief@ciptadana.com ECONOMIST ANALYST ANALYST Imanuel Reinaldo Niko Margaronis Fahressi Fahalmesta T ext 820 Telecommunication, Tower, Healthcare Cement, Toll Road, Poultry E reinaldoimanuel@ciptadana.com T ext 734 T ext 735 E margaronisniko@ciptadana.com E fahalmestafahressi@ciptadana.com ANALYST ANALYST TECHNICAL ANALYST Stella Amelinda Fransisca Maharani Putri Trevor Gasman Consumer Media, Retail T ext 934 T ext 740 T ext 760 E gasmantrevor@ciptadana.com E amelindastella@ciptadana.com E putrifransisca@ciptadana.com RESEARCH ASSISTANT Sumarni T ext 920 E sumarni@ciptadana.com EQUITY SALES Co HEAD OF INSTITUTIONAL SALES Dadang Mulyana Plaza ASIA Office Park unit 2 Plaza ASIA Office Park unit 2 Jl. Jend. Sudirman Kav. 59 Jl. Jend. Sudirman Kav. 59 Jakarta Jakarta T ext 838 T ext 807 Co HEAD OF INSTITUTIONAL SALES The Fei Ming F F E mulyanadadang@ciptadana.com E thefeiming@ciptadana.com BRANCH OFFICES JAKARTA - MANGGA DUA JAKARTA - PURI KENCANA SURABAYA Komplek Harco Mangga Dua Perkantoran Puri Niaga III Intiland Tower Surabaya Rukan Blok C No.10 Jl. Puri Kencana Blok M8 No.2E Ground Floor Suite 5 & 6 Jl. Mangga Dua Raya Kembangan Jl. Panglima Sudirman Jakarta Jakarta Surabaya T T T F F F SEMARANG Gedung Menara Suara Merdeka 6th Floor Unit 02 Jl. Pandanaran No.30 Semarang Please see analyst certification and other important disclosures at the back of this report 5

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