Indonesia CPI Inflation Rate: Data, Forecast & Trends

As of April 2025, Indonesia's year-on-year (YoY) headline inflation rate, as measured by the Consumer Price Index (CPI), stood at 1.95%. This marks an acceleration from 1.03% in March 2025, reaching its highest annual reading since August 2024. Despite this uptick, inflation remains firmly within Bank Indonesia's (BI) target range of 1.5% to 3.5% for 2025. This achievement underscores the effectiveness of the central bank's proactive monetary policy and the government's supportive measures in anchoring price stability.

A detailed breakdown of the CPI components for April 2025 reveals the key drivers behind the recent movements. The rebound in spending during the Eid al-Fitr festivities played a significant role in the acceleration.

• Food, Beverages, and Tobacco: This group, which holds a substantial weight (25%) in the CPI basket, was the largest contributor to inflation, rising by 2.17% YoY in April, an acceleration from 2.07% in March. This was driven by higher prices for items like powdered coffee, cooking oil, and machine-made kretek cigarettes. Volatile food inflation, specifically, stood at 0.64% YoY in April, mainly due to increased prices for bird's eye chili, red chili, shallots, garlic, and coconut.
• Housing, Water, Electricity, and Household Fuel: This category (20.4% weight) rebounded sharply with a 1.60% YoY increase in April, after a significant decline of -4.68% in March. This rebound was largely due to the expiration of the 50% electricity tariff rebate that had been in place during the first two months of 2025.
• Health: Prices in the health sector (4.7% weight) accelerated slightly to 1.83% YoY in April, up from 1.80% in March.
• Accommodation and Restaurants: Inflation in this group moderated to 2.14% YoY in April, compared to 2.26% in March.
• Transportation: Prices in the transportation sector saw a decline of 0.11% YoY in April, a reversal from the 0.83% increase in March. This provided some disinflationary impulse.
• Communication: This sector continued to experience deflation, falling by 0.64% YoY in April.

The data indicates that while overall inflation is well-managed, certain categories, particularly food and those influenced by administered prices (like electricity and transportation), remain sensitive to seasonal demand spikes and changes in government subsidies.

On a month-on-month (MoM) basis, Indonesia's CPI climbed by 1.17% in April 2025. This was a moderation from the 1.65% rise in March, which had marked the sharpest monthly gain since December 2014.

The monthly increase in April was primarily driven by:

• Administered Prices Group: This category surged by 5.21% MoM in April, largely due to higher electricity tariffs, airfares, and train fares. This coincided with the Eid al-Fitr holiday, which typically sees increased travel and related price adjustments.
• Food, Beverages, and Tobacco: This group increased by 0.61% MoM in April.
• Personal Care and Other Services: Saw a 0.54% MoM increase.

The monthly figures clearly illustrate the impact of seasonal factors and the unwinding of temporary government subsidies on the overall price level.

Indonesia's average inflation rate in 2024, as measured by the Consumer Price Index (CPI), averaged 2.3% last year. This marked a significant decrease from the higher figures observed in previous years.

The disinflationary trend was largely attributed to well-anchored inflation expectations and the effective coordination between the government and Bank Indonesia. Food prices, a key component of Indonesia's CPI, showed a notable moderation, though certain staples experienced some seasonal fluctuations. Energy prices also remained relatively stable. The easing inflation provided Bank Indonesia with greater flexibility in its monetary policy decisions, supporting economic stability and growth. The country's commitment to maintaining price stability played a crucial role in achieving these favorable inflation outcomes.

Indonesia's inflation history over the past three decades has been characterized by periods of high volatility, notably during economic crises, followed by sustained efforts to achieve price stability.

In the mid-1990s, annual inflation rates were typically in the high single digits. However, the Asian Financial Crisis of 1997-1998 delivered a severe shock. The sharp depreciation of the rupiah and widespread economic disruption led to an unprecedented surge in inflation, reaching a peak of 58.45% in 1998. This period underscored the vulnerability of the Indonesian economy to external shocks and currency fluctuations.

Following the crisis, Bank Indonesia (BI) adopted an inflation-targeting framework, which gradually helped to anchor inflation expectations. By the early 2000s, inflation had largely returned to single digits. There were occasional spikes, often driven by rising global commodity prices or adjustments to administered fuel prices.

The 2010s saw a more stable period for inflation, generally hovering around the 4-6% range, though sometimes influenced by government policy on fuel subsidies. In the latter half of the 2010s, inflation trended lower, averaging below 3% in 2019.

The COVID-19 pandemic and the subsequent global economic rebound led to a resurgence of inflationary pressures in Indonesia. This was a result of global supply chain disruptions, rising commodity prices, and robust domestic demand. Bank Indonesia responded with a series of interest rate hikes, moving its benchmark rate from a low of 3.50% in August 2022 to a peak of 6.25% by April 2024. These proactive measures, coupled with government policies to manage administered prices and food supply, have been instrumental in bringing inflation back into the target range in late 2024 and early 2025.

Bank Indonesia (BI) closely monitors various inflation metrics, particularly distinguishing between headline inflation and core inflation, to understand underlying price pressures.

• Headline Inflation (CPI) includes all items in the consumer basket and is highly susceptible to volatile components like food and administered prices (fuel, electricity, etc.).
• Core Inflation excludes these volatile components, providing a clearer indication of demand-driven inflationary pressures and long-term price trends. It is generally more reflective of monetary policy's impact.

In April 2025, Indonesia's core inflation stood at 2.50% YoY. This represents a slight uptick from 2.48% in March, reaching a 22-month peak. Key contributors to core inflation included gold jewelry and automobiles.

The fact that core inflation (2.50%) is currently higher than headline inflation (1.95%) in April 2025 is a crucial insight. This divergence suggests that while headline inflation has been influenced by the expiration of electricity rebates and seasonal food price movements (some of which have moderated), underlying demand-side pressures and the pass-through of import costs are still evident. The recent depreciation of the rupiah, which affects import costs, has also been cited as a factor contributing to core inflation. This indicates that while the overall inflation picture is positive, BI remains vigilant about underlying dynamics that could reignite price pressures.

Despite Indonesia's success in managing inflation thus far, several key risks could still influence its future trajectory:

• Global Commodity Price Volatility: As a major commodity producer and consumer, Indonesia remains vulnerable to global price swings, particularly for oil, gas, and food. Geopolitical tensions (e.g., in the Middle East or Eastern Europe) or adverse weather events could trigger renewed surges in commodity prices, directly impacting domestic inflation through imported costs and supply-side shocks.
• Exchange Rate Fluctuations: The stability of the Indonesian Rupiah (IDR) is crucial for inflation control. Persistent strength of the US dollar or changes in global risk sentiment could lead to renewed depreciation of the IDR. A weaker rupiah directly increases the cost of imports, fueling imported inflation, particularly for consumer goods and raw materials. Bank Indonesia has actively intervened in foreign exchange markets to stabilize the rupiah, but sustained pressure could limit its policy flexibility.
• Fiscal Policy and Subsidies: The Indonesian government has historically used subsidies (e.g., for fuel and electricity) to manage inflation and support purchasing power. While effective, these subsidies can be a significant fiscal burden. Any significant reduction in subsidies or changes in administered prices could lead to upward pressure on headline inflation, potentially forcing Bank Indonesia to maintain a tighter monetary policy stance. The expiration of the electricity tariff rebate in early 2025 is a recent example of such an impact.
• Food Supply and Logistics: Volatility in domestic food prices, often linked to weather patterns, agricultural output, and logistics, remains a key driver of headline inflation, especially for lower-income households. Disruptions to food supply chains or poor harvests could lead to renewed food price spikes. The government's efforts to improve food distribution and reduce supply chain bottlenecks are crucial to mitigating this risk.
• Global Trade Dynamics and Protectionism: While global trade has recovered, new trade tensions or the fragmentation of global supply chains could lead to increased import costs or reduced export demand for Indonesia. As an export-oriented economy, such developments could indirectly affect domestic economic activity and inflation.
• Sustained Domestic Demand: While robust domestic demand is generally positive for growth, if it becomes excessively strong relative to supply, it could create demand-pull inflationary pressures. Consumer confidence has shown some fragility, but sustained government spending (including new priority programs like free nutritious meals) and private consumption could keep underlying inflation elevated, potentially necessitating a cautious stance from Bank Indonesia.

Indonesia Inflation Data