Indonesia inflation eases in October as core price growth undershoots forecasts
Indonesia's annual inflation rate eases slightly in October, staying within the central bank's target range for 2026 and 2027. Core inflation also comes in below market expectations, while food prices and higher transport fares continue to drive overall consumer price growth.
Highlights
- Indonesia's annual inflation rate fell to 3.23% in October from 3.28% in September, slightly under the 3.29% expected in a Reuters poll.
- Annual core inflation was 2.56% in October, undershooting the 2.75% poll forecast due to food price hikes and higher transport fares from fuel costs.
- Inflation remains within Bank Indonesia's 1.5%–3.5% target band for 2026–2027, supporting policy stability despite ongoing pressures in key consumer categories.
October price data and inflation drivers
As reported by Reuters, official data released on Monday shows Indonesia's annual inflation rate at 3.23% in October, down from 3.28% in September and slightly below the 3.29% expected in a Reuters poll.Annual core inflation, which excludes government-controlled prices and volatile food items, stands at 2.56%, below the poll forecast of 2.75%. Ateng Hartono, deputy chief of Statistics Indonesia, says October inflation is driven mainly by food prices, including chili, rice and beef, as well as higher transport fares caused by fuel price rises.
Policy setting and market implications
Indonesia's inflation reading remains within Bank Indonesia's target band of 1.5% to 3.5% for 2026 and 2027, indicating that headline price pressures are still broadly contained despite persistent cost increases in key household categories.Bank Indonesia raised its benchmark rate by a total of 100 basis points between May and June to support the rupiah and help anchor inflation. The latest data may offer some reassurance on price stability, although food and transport costs remain important risks for consumers and policymakers.
Our earlier article on the surge in crude oil shipping costs explained how conflict-related risks and rerouted tanker traffic pushed freight and insurance rates sharply higher, making transport a much larger component of oil prices. We also noted that import-dependent markets such as Indonesia could feel the impact through higher fuel costs that can spill over into broader consumer prices via transportation and logistics.
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