Economists are wary of Core Inflation hitting 3%, indicating inflation has reached producer levels. Although the August Headline Inflation was maintained below 5% on an annual basis, and recorded a deflation of 0.21% on a monthly basis. However, the annual Core Inflation in the same period booked 3.04% (Vs. Jul. 2.86%). This increase also occurred when there was no increase in Administered Prices (such as fuel and electricity) for the August period, indicating that producers had anticipated inflation expectations by increasing the prices of a number of goods. NHKSI Research sees that both supply restrictions and subsidized fuel price increases will have a propagation impact on Core Inflation. Meanwhile, limiting the supply of subsidized fuel means that people are directed to use non-subsidized fuel. In the end, inflation expectations mean investors expect a higher Expected Return on investment instruments.

Corporate Bonds
WSKT: Strengthens WBW Capital. PT Waskita Karya (Persero) Tbk (WSKT) strengthened Waskita Bumi Wira’s (WBW) capital of IDR38.15 billion, where Waskita Toll Road executed 38,150 shares issued by WBW. Meanwhile, the implementation of this transaction is to meet the funding needs of WBW. (Emiten News)

Domestic Issue
Distribution of Subsidized Fuel Restricted. The government has ensured that restrictions on the distribution of subsidized fuel oil (BBM) will still be carried out even though fuel prices are raised. The restriction on the distribution of subsidized fuel is carried out through a digitalization system by PT Pertamina. The Minister of Energy and Mineral Resources (ESDM) revealed, regarding the accuracy of the allocation of subsidized fuel, many people still use subsidized fuel even though they are classified as capable. (Kontan)

Short term pain for long term gain. The Government’s decision to increase subsidized fuel prices by more than 30%, for both Pertalite to IDR10,000/Liter and Diesel to IDR6,800/Liter, made transportation and logistics costs higher, which in turn pushed up food prices and inflation. Meanwhile, NHKSI Research is observing the shifting of fuel subsidy allocations to more productive sectors, such as: building infrastructure and strategic industries. We project that this week, JCI will move in the range of Support: 7.140-7,135 / 7.080-7,060/7,040/7,000/6,950 and Resistance: 7,200-7,230 / 7,260 / 7,300 / 7,350-7,360.

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