Malaysia: Inflation at 18-month high in December

JAKARTA: Indonesia’s annual inflation rate hit an 18-month high in December, reaching 1.87%, driven by rising prices of foodstuff and plane tickets, data issued by the country’s statistics bureau shows.

A Reuters poll had expected a rate of 1.80% in December. The previous month’s inflation rate was 1.75%.

Bank Indonesia is targetting inflation to be within a range of 2% to 4% for 2021 and 2022.

The December core inflation rate, excluding government-controlled and volatile prices, rose to 1.56%, from 1.44% in November. The poll had expected 1.52%.

In a separate development, shares of Indonesia’s leading coal miners fell yesterday after the government banned exports of coal for January due to concerns about low supplies triggering power cuts in the world’s biggest exporter of thermal coal.

The decision is likely to send shockwaves through global markets since the South-East Asian country exported around 400 million tonnes in 2020.

Its biggest customers are China, India, Japan and South Korea.

The government said on Saturday it brought in the ban because low coal supplies at domestic plants could lead to widespread blackouts, although it said it planned to evaluate the decision soon.

Shares of Indonesian miner Adaro Energy fell 3.1%, while Bukit Asam lost 3.3% and Bumi Resources tumbled 2.9% in early trade.

Indonesia has a so-called Domestic Market Obligation (DMO) policy whereby coal miners must supply 25% of annual production to state utility Perusahaan Listrik Negara (PLN) at a maximum price of US$70 (RM292.04) per tonne, well below current market prices.

Ridwan Jamaludin, director-general of minerals and coal at the energy ministry, said at the weekend that the ban was temporary but if not imposed almost 20 power plants with 10,850 megawatts of power would have to shut.

Ridwan said coal supplies to power plants each month were below the DMO, so by year end, “there was a coal stockpile deficit”.

The Indonesian Coal Mining Association (ICMA) called on the government to revoke the ban, saying in a statement it was “taken hastily without being discussed with business players”. The chairman of ICMA, Pandu Sjahrir, said the group met trade ministry officials at the weekend to try to reach a solution.

“The main objective now is to avoid power outages. For the very short term, the solution is for 10 of our biggest members to try to help with PLN’s shortage,” he told Reuters yesterday.

The association has said it was concerned about potential disputes with buyers if coal producers declared force majeure for not being able to deliver coal exports.

South Korea, one of Indonesia’s main buyers, said while there were likely to be some delivery delays, the country expected 55% of January coal shipments that had been loaded to be delivered on time, its industry ministry said.

“While the ministry expects Indonesia’s coal export ban would have limited short-term impact, considering the country’s coal inventory and coal shipments from other countries, including Australia, we need to closely monitor developments in Indonesia and other countries,” the ministry said. —Reuters