Indonesia’s inflation hits record 20-year low in August amid declining purchasing power

first_imgIndonesia recorded core inflation of 2.03 percent in August, while administered prices were up 1.03 percent. At the same time, food prices recorded an annual deflation of 1.09 percent.The pandemic has hit Indonesian consumers hard, with millions losing their jobs due to a cooling economy as a result of the COVID-19 physical restrictions. Household consumption, which typically accounts for more than half of Indonesia’s gross domestic product (GDP), shrank 5.51 percent, deeper than overall economic contraction of 5.32 percent in the second quarter of the year.The CPI recorded a 0.05 percent month-to-month (mtm) deflation in August, due primarily to the falling prices of poultry, shallots and air travel. In comparison, the CPI saw 0.12 percent mtm inflation in August 2019.The steepest deflation in August was recorded in food, beverage and tobacco prices (0.86 percent) as well as transportation prices (0.14 percent). Meanwhile, the highest inflation was recorded in personal care and other services (2.02 percent), including gold, and in education (0.57 percent). Indonesia recorded the lowest inflation in two decades in August as consumer prices fell due to weakening purchasing power, Statistics Indonesia (BPS) announced on Tuesday.BPS said Indonesia’s consumer price index (CPI) declined to 1.32 percent in August. The CPI fell further below Bank Indonesia’s 2020 inflation target of 2 to 4 percent to reach the lowest level since May 2000, as the global health crisis continued to batter the country’s economy and consumer spending.“Inflation in many countries slowed [and] even headed into deflation, as the COVID-19 pandemic delivered a severe blow to [both] the demand and supply sides,” BPS head Suhariyanto told a virtual press briefing on Sept. 1. “The declining trend in core inflation showed that purchasing power has yet to recover.” The personal care and education segments resisted deflation due to an increase in gold prices, while the new academic year led to seasonal inflation due to increased tuition for primary, secondary and tertiary education, said Suhariyanto.The increasing trend in gold prices indicated a higher risk of a recession in the third quarter, said Bank Mandiri chief economist Andry Asmoro. He added that easing core inflation indicated “significantly weaker demand” that had “still not recovered”.The major contributor to annual inflation this year would be “the increasing gold prices due to uncertainty in the global financial markets”, Andry wrote in a research note made available to The Jakarta Post. He also expected inflation to reach 1.95 percent by the yearend, lower than the 2.59 percent inflation recorded last year as well as the central bank’s target range.“We view that the increased money supply from the economic stimulus, namely [the] quantitative easing and burden sharing [policies], will have a limited impact on the inflation rate this year. This condition will support the central bank in continuing to accommodative the monetary policy,” he said.Bank Indonesia (BI) has cut the benchmark interest rate four times this year to 4 percent, the lowest since 2016, to cushion the economy from the impacts of the pandemic. The central bank is also continuing in its role as a standby buyer of government bonds and is taking part in a debt monetization scheme to help the government fund its COVID-19 response.The fiscal authority has earmarked Rp 695.2 trillion (US$47.2 billion) in stimulus measures to revive the economy and stimulate domestic demand, even as consumers reined in spending while the government restarted economic activities in August to accelerate recovery.Finance Minister Sri Mulyani Indrawati said recently that the economy was projected to shrink another 2 percent in the worst-case third-quarter scenario for an estimated annual contraction of 1.1 percent.Topics :last_img read more

Risk brings less reward for UK charity returns in 2014

first_imgCautious investing paid off more than high-risk strategies for UK charity portfolios last year, according to preliminary figures from Asset Risk Consultants (ARC).It is the first time since 2011 that lower-risk portfolios have performed better than their higher-risk counterparts.Graham Harrison, managing director at ARC, said: “With the mainstream equity markets recording returns ranging from marginally positive (UK equities) to circa 9% (US equities), 2014 will go down as a year when the UK bond market unexpectedly outshone its equity counterpart.”While the ARC Cautious Charity Index made the biggest gain – 6.5% – for the year to 31 December 2014, the ARC Equity Risk Charity Index – the riskiest portfolios – gave the poorest return, at 4.5%. The two intermediate indices achieved returns commensurate with the amount of caution in the portfolio.Returns were 5.9% for the ARC Balanced Asset Charity Index, and 5.1% for the higher-risk ARC Steady Growth Charity Index.However, cumulative returns still increase with portfolio risk.Three-year returns (to 31 December 2014) for the indices range from 20.2% for the Cautious Index to 38.6% for the Equity Risk Index.And annualised performance figures since the indices were launched in December 2003 are 5.3% (cautious), 6.2% (balanced asset), 6.8% (steady growth) and 7.2% (equity risk).The ARC indices are calculated from the actual performance (net of fees) of around 1,500 segregated charity portfolios run by 28 asset managers, although for the preliminary figures fourth-quarter performance has been estimated.There are no asset class restrictions: portfolios are classified according to their volatility in relation to UK equity markets.For example, the ARC Cautious Charity Index has 0-40% risk relative to UK equity markets, while the ARC Balanced Asset Charity Index has 40-60% risk.Harrison said: “Going into 2014, few market commentators were predicting returns from government bonds would exceed those from equity markets, but that is what transpired.“Double-digit returns were recorded from 10-year Gilts (both conventional and index-linked) for 2014, as yields moved down from 3% on the 10-year Gilt to end the year at just 1.75%.”And he warned that there was a mathematical possibility that bonds could outperform again in 2015.He said: “If the 10-year Gilt yield were to fall below 1%, double-digit returns would again be recorded for bond indices.“With consensus for UK equity market returns in the 5-10% range, a repeat of 2014 cannot be ruled out.“However, most market commentators expect yields to rise over the course of 2015 and are predicting negative returns from government bond indices.” Harrison also said 2014 had proved to be a volatile but ultimately positive year for most institutional investors.But he said: “Since 2009, government and central bank manipulation of interest rates and bond markets has spilled over into exchange rates, equity markets and real assets, and finding alpha has become more of a struggle.“Institutional portfolios have been moving up the risk spectrum towards an ever-increasing exposure to large international equities with solid dividend prospects.”Harrison concluded: “We believe that 2015 will be a year of ascendancy for actively managed versus ‘passive benchmarked’ portfolios, as financial markets move from being liquidity-driven, and economic fundamentals assert themselves.”last_img read more

Reynolds recommends schools close for four weeks, will hold news conference Monday

first_imgOFFICE OF THE GOVERNORGovernor Kim Reynolds ★ Lt. Governor Adam GreggFOR IMMEDIATE RELEASE: Sunday, Mar. 15, 2020Gov. Reynolds recommends Iowa schools close for four weeks, will hold a press conference tomorrowRecommendation follows additional COVID-19 cases in Iowa, including data from national labsDES MOINES – Upon discovery of the existence of substantial community spread of COVID-19 in the state, Gov. Reynolds is recommending that Iowa schools close for four weeks.“Based on new information today from the Iowa Department of Public Health, now is the time to move to the next level of response,” Gov. Reynolds stated. “I am now recommending that all Iowa schools close for a period of four weeks to help mitigate the spread of COVID-19.”Gov. Reynolds released the following video statement, it can be viewed here.Gov. Reynolds is making this recommendation in consultation with the Iowa Department of Public Health (IDPH) and based on CDC guidelines.Earlier today, IDPH was notified of four additional positive cases of Iowans with COVID-19, for a total of 22 positive cases. According to IDPH, two cases are related to international travel. The individuals are residents of Allamakee County, one is a middle-age adult between 41-60 years; the other is a child, age 0-18 years. The third case is a middle-age Johnson County resident with no identified travel-related risk or exposure to a known COVID-19 case, and is considered the second case of community spread in Iowa. The fourth individual resides in Polk County and is a middle-age adult and indicates a third case of community spread.One of today’s new cases was the first Iowa test conducted by a national lab. With testing options now expanding, Iowa expects the numbers of positive cases to increase. The governor will hold a press conference tomorrow. The press conference will be open to credentialed members of the press and streamed on her Facebook page.The state of Iowa is developing policies to ensure continued access to child care during this time of emergency, including meals for low income students.Also today, Gov. Reynolds signed a Proclamation of Disaster Emergency continuing the proclamation signed on March 9, allowing retailers that sell liquor, beer, wine, carbonated beverages, and other beverages with an Iowa beverage container deposit to stop accepting empty cans and bottles for the duration of this disaster emergency.On Sunday evening, the CDC updated its mass gathering guidance to postpone for the next 8 weeks any events with 50 or more people. The goal is to reduce introduction of the virus into new communities and to slow the spread of infection in communities already affected by the virus. This recommendation is not intended to supersede the advice of local public health officials.COVID-19 was first linked to an outbreak in Wuhan, China, but cases have subsequently been identified in several countries, including the U.S. Symptoms of COVID-19 include fever, cough and shortness of breath. Those most at risk of the virus are older adults, and individuals with underlying health conditions. To watch Governor Reynolds’ statement, click on the video above read more