Indonesia: Inflation picks up in August from July
Latest reading: Consumer prices were up 3.2% on a year-on-year basis in August, following a 2.9% rise in the previous month. The latest reading remained within Bank Indonesia’s 1.5–3.5% target range.
Relative to the prior month’s figures, there were higher price pressures for clothing and footwear (+1.2% in annual terms vs +1.0% in July), recreation and entertainment (+1.7% vs +1.6% in July) and food, beverages and tobacco (+3.9% vs +3.0% in July). In contrast, price pressures reduced for transport in August (+4.8% vs +5.1% in July). Finally, the change in housing, water, electricity and household fuels prices was the same as in the prior month (+1.0% in August and July).
Meanwhile, core consumer prices rose 2.9% on a year-on-year basis in August, following a 2.8% rise in the prior month.
Finally, consumer prices were up 0.21% in August in month-on-month terms, following a 0.14% decline in the prior month.
Panelist insight: United Overseas Bank’s Enrico Tanuwidjaja commented:
“Overall, August’s inflation data point to continued price pressures from food, gold jewelry, and transport. While inflation remains within BI’s target range, the central bank is likely to remain cautious, balancing the need to support growth against inflation and rupiah stability risks. Middle East geopolitical tensions remain the main upside risk, particularly through higher energy prices, logistics costs, and domestic transportation fares. We expect inflation to average around 2.5% in 2026 before strengthening to 3.0% in 2027, driven by firmer domestic demand, stronger economic activity, and the normalization of administered and service-sector prices.”