Morgan Stanley's Deyi Tan and Denise Yam expect Indonesia's 17% inflation to continue at least through the first quarter of 2006 as outlined below:
Prices still rising at 17% year on year: The consumer price index rose by 17% YoY in January (vs. 17.1% in December), making this the fourth consecutive month of double-digit inflation following the fuel price hike of 126% in October.
Fuel price spillover on other segments: We are still seeing strong inflationary pressures in segments such as food and processed food due to higher transport costs; housing due to utilities; and transport due to higher fuel prices... December core inflation indicates a slight slowdown to 7.9% from 8.1% in November.
Inflation to ease in “steps
