JAKARTA: Consumer prices in Indonesia and Thailand grew at a slower pace than economists predicted last month, giving central banks in South-East Asia’s two biggest economies scope to keep interest rates low for longer.
Annual inflation in Indonesia was 3.6% in March, compared with the median estimate of 3.8% in a Bloomberg survey of 19 economists. In Thailand, the measure was 0.8% versus a projection of 1.3%.
Lower food costs are helping restrain inflation, signalling the pick-up in prices in the region may be gradual.
That eases pressure on policymakers to tighten with most economists predicting Bank of Thailand and Bank Indonesia will refrain from raising interest rates this year.
“The inflation pressure we are seeing in the region is not as worrisome as in the past,” said Gundy Cahyadi, an economist at DBS Group Holdings Ltd in Singapore.
“You’re going to see somewhat different pressures in each economy depending on how strong their domestic demand is. In that sense, we are a little more concerned with Indonesia compared with Thailand. But it’s not like inflation in Indonesia is going to shoot up significantly soon.”
Indonesia’s consumer prices declined 0.02% from the previous month, compared with the median estimate for a 0.2% increase. Core inflation was at 3.3%, compared with estimate of 3.4%.
Thailand’s consumer prices declined 0.5% from the previous month, compared with the median estimate for little change. Core inflation was at 0.6%, matching the estimate.
Still, commerce ministry raised 2017 inflation forecast to as high as 2.2% from 2% based on assumptions of 3% to 4% economic growth, Dubai crude oil prices at US$50 to US$60 per barrel and baht at 35.5 to 37.5 per US dollar.
In Thailand, “with inflationary pressures at bay, we expect the central bank to remain supportive and keep its policy rate low at 1.5% throughout 2017,” Eugenia Victorino, an economist at Australia & New Zealand Banking Group in Singapore, said in a note. — Bloomberg