Thread: "Real inflation" in Bali?

I am wondering about the ”REAL inflation” in Bali compared to major Western currencies like Euros and Dollars (and maybe the Sterling). What I´m thinking is that, after all, for the retiree or expat what matters is not solely the stated percentage of annual inflation given by Indonesian/Balinese authorities but rather how much more expensive things actually get in terms of Dollars/Euros. Example: Let´s say that Bali experiences 10% inflation in one year but the same year that Bali experiences high inflation the Rupiah depreciates 4% in value against the Euro. I suppose in this case, for a person whose source of income or whose nest egg/reserves in bank account are in Euros, the “REAL” inflation would only be 6% as opposed to the official 10%.
So I guess my question is how much inflation there is in Bali and what we can expect in the future? And how much inflation is there in terms of major Western currencies compared to the official numbers?

To accurately gauge inflation here in Indonesia, Bali specifically, you have to look at a rolling five year average, at the least. This is because when you look at any one particular year…2008 for an example, the annual inflation rate is high due primarily to the substantial increase in petrol earlier this year.

For the past several years, the IDR has been very stable, fluctuating in the 1% zone from an average of around 9,250 to the US dollar, to which it is aligned.

Of course, with all the recent changes in global markets and the global economy, who can tell for certain what that may mean in the coming months. Thus far, there has not been a measurable decline in the housing sector, or the price of land. It’s too early to tell what effect the global crises will have on tourism, and 2008 will most likely be a record year for Bali.

Your questions simply cannot be answered until after the credit markets have returned to some normalcy, and the world stock markets have found their new base line.

For me, inflation has been quite noticeable during the four years I have lived here and that's because things I buy for personal or business use have been hit hard - I eat and entertain mostly western, fuel is a major cost component of building materials, and land prices have skyrocketed.

What has not been rising dramatically has been average salaries and that's a bummer for locals - I try not to exploit it.

I'm thinking that short a melt-down in RI and with a moderate slack globally that land prices on average here should flatten - as they ought to, ya?

I've been waiting for pump prices to go back down :)

Real inflation is relative.......

“I'm thinking that short a melt-down in RI and with a moderate slack globally that land prices on average here should flatten - as they ought to, ya?”

I can understand how one could think that they “ought to” but I wouldn’t bet on it.

I spent almost three hours earlier this morning with the head of our village and he told me that a family here just sold 5 are of village land for 70 million an are…nowhere close to the Ayung River gorge, and no sawah views either. That same land was 50 million an are just two years ago. It was another family in our village who bought the land…i.e., this was a Balinese to Balinese transaction.

In my view the Balinese are becoming increasingly aware of the value and extreme desirability of what is clearly their most valuable asset…land. I can see no reason why land prices in Bali will do anything else but rise in the future.

I would still predict flattening or softening -

The seller doesn't set the price, the buyer does. And fewer buyers equals....yada yada

But yea depending on a buyer's desire and the particular property who knows?

....as for sales of lux villas IMHO I sold mine for :) which I thought fair then and now - half of something similar in scope back in the States. But...check this
http://www.nytimes.com/2008/10/15/gr...ref=realestate
Again IMHO, this is way out of line as it looks very, er, average! Hope and a prayer!

Thanks for sharing that link. I agree, wow! MAHAL! That villa is lifeless…no style, no grace, no landscaping…and, what a totally boring interior!

I loved this quote too…

“A villa of this size usually has a staff of four people, according to Mr. Georgeson. Their wages run $600 to $700 a month, total.”

FOUR people? AND, they average a monthly wage of 1.5 million??!! I wonder just how much of that monthly wage actually gets into the staff’s hands?

I love this quote too…

“The floors are of concrete tile made in Yogyakarta, a Javanese artisan city.”

Concrete tile…now THAT’s what I call luxury! :lol: :lol:

DCC, you say, “the seller doesn't set the price, the buyer does.” I beg to differ, especially in my neck of the woods where demand far exceeds supply.

My brother in law, the architect, just showed up and I showed him this villa including all the additional photos of it. He couldn’t get over the price. Including ten are of land in the Ubud area, he could do this villa for less than half the price…and he’d be laughing all the way to the bank. :lol: :lol: :lol:

Come to think of it, I'd be laughing too, as he'd gladly pay Eri ten percent for such a plumb project. :P

The floors wouldn't be cast concrete either, they either be polished marble or granite.

the owner of that place is grasping, desperately grasping..

ct

I thought you would a kick out of that........I was also amused to learn that "A typical vacation home in Bali costs anywhere from $850,000 to $3.5 million" - when did spoiled.......oops, I mean spoilt.....bankers from HK & S'pore become the norm! :wink: