Indonesia: Inflation hits highest level in eight months in April
Latest reading: Inflation came in at 1.9% in April (March: 1.0%), above market expectations and marking the highest inflation rate since August 2024. Looking at the details of the release, the rise was driven by a rebound in housing and utility costs as temporary energy subsidies were withdrawn. A faster increase in prices for food also pushed up inflation. That said, inflation remained within the Central Bank’s target band of 1.5–3.5% as transport costs continued to drop.
Meanwhile, annual average inflation came in at March’s 1.7% in April, leaving the trend unchanged. Similarly, core inflation was also stable, coming in at March’s 2.5% in April.
Finally, consumer prices rose 1.17% in April over the previous month, a smaller increase than March’s 1.65%.
Outlook: Our panelists see inflation rising from April’s level by the end of the year, supported by robust private consumption growth. However, price pressures should remain within the Central Bank’s 1.5–3.5% target range through year-end. Overall in 2025, inflation is set to fall slightly compared to 2024 and remain comfortably below the regional average. A weaker-than-expected rupiah and stronger-than-projected monetary easing pose upside risks.
Panelist insight: On the outlook, analysts at the EIU commented:
“The anticipated weakening of the rupiah in the months ahead will maintain price pressures on imported commodities, such as rice and petroleum. The delay in the government’s VAT increase on non-luxury goods will partially offset these price pressures.”