Indonesia's annual inflation rate fell to 1.55% in November 2024, its lowest since July 2021, down from 1.71% in October and slightly above the 1.50% consensus forecast. The largest contributors were food, beverages, and cigarettes, although volatile food prices dropped to -0.32% (yoy) from 0.89%, driven by abundant rice supplies despite earlier harvest delays.

On a monthly basis, inflation rose 0.30%, the sharpest increase in eight months, reflecting festive demand and a rise in gold prices, driven more by hedging behavior than core demand pressures.

Simpan Views

Bond Market Stands a chance to benefit

With deflationary pressures likely to persist globally, Indonesia's real yields remain wide and attractive. The wide spreads between government bond yields and inflation remain attractive and expected to boost capital inflows into the bond market. 

Simpan Bond Fund focuses on a diversified basket of Indonesian bonds currently invested 

in medium duration a government bond portfolio. The Fund is well-positioned to capitalize on capital inflows to the Indonesian bond market. As the ongoing rate cut cycle and monetary easing are expected to lower government bond yields in the medium term, the fund offers a diversified option for investors seeking both income generation and capital preservation over the medium term.