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In April, Indonesia's inflation rate reached an eight-month high.

The statistics bureau reported that Indonesia's headline rate of inflation reached an eight-month high in April. This was higher than expected as the two-month discount on certain electricity prices had ended.

Last month, the consumer price index for Southeast Asia's biggest economy increased to 1.95% compared with a polled estimate of 1.60%. It was up from 1.03% last March.

After months of readings below target, the April inflation rate returned to the central bank's range of 1,5% to 3,5% for the first month of this year.

At a press briefing, the Bureau said that gold jewellery prices, rents for homes and certain food items were driving April's inflation.

Data from the Bureau shows that month-to month inflation in gold jewellery reached its highest level for more than four year at 10.52 % last month.

Gold purchases have increased in Indonesia as a result of concerns over the economy, and the depreciation rupiah which reached a record low last month.

Since the beginning of 2025, inflation has been low mainly due to discounts on some electricity tariffs that only applied from January to February.

Bureau said that the impact of the discount had dissipated in April.

Some analysts believe that the soft inflation combined with the concerns about a weaker economy outlook due to global trade tensions may lead Bank Indonesia (BI).

Hosianna Sitmorang, an economist at Bank Danamon, said that a decline in PMI manufacturing data for April would be a concern, "especially if the 1Q25 GDP is released on Monday and prints below 5%."

A poll shows that Indonesia's GDP is growing at 4.91% in Q1.

BI anticipates that this year's GDP growth will be a little below the middle of its forecast range of 4,7% to 5,5%. The government has set the GDP growth for this year to be higher at 5.2%, compared to 5.03% by 2024.

BI will likely have to focus its efforts on protecting the rupiah, which hit a record low last month against the dollar. (Reporting and editing by John Mair, Stephen Coates and Stefanno Sulaiman)

(source: Reuters)