June 3, 2026
JAKARTA – Headline inflation accelerated in May amid heightened pressures from rising fuel and food prices.
Statistics Indonesia (BPS) reported that the consumer price index (CPI) surged by 3.08 percent year-on-year (yoy) in May, though it remained below Bank Indonesia’s (BI) inflation target of 1.5 to 3.5 percent.
BPS official Pudji Ismartini said on Tuesday that the increase in inflation was mainly driven by the food, beverage and tobacco category, especially fresh fish, rice, chicken meat, cooking oil, chili and machine-made clove cigarettes (SKM).
Another large contributor came from the personal care and other services group, particularly gold products.
Inflation in transportation also surged by 2.30 percent yoy in May, with the highest inflation rate of 8.03 percent recorded in consumer prices. The transportation category, which include automotive fuel prices and airfare, contributed 0.28 percent to the annual inflation.
On a monthly basis, inflation in May was up 0.28 percent. In addition to rising food prices, energy commodities have also pushed inflation up, with household fuel contributing 0.03 percent, while nonsubsidized fuel and airfares each contributed 0.02 percent.
The United States and Israel war with Iran in February has led to soaring global oil prices, which have also prompted surging airfares, with state-owned oil and gas giant Pertamina raising domestic jet fuel prices by an average of 70 percent in April compared with the month prior.
However, May’s inflation was constrained by deflation in several commodities, including chicken meat and gold products.
Gold prices have been moving on a downward trend so far this year, hovering at around US$4,500 per ounce on Tuesday, amid global fears of rising inflation risk and tighter monetary policies because of the Middle East conflict.
The precious metal traded above $5,300 in January.
BPS noted that inflation rose across all components. Core inflation in May stood at 2.59 percent yoy, while administered price and volatile food recorded inflation of 2.07 percent and 6.24 percent, respectively.
The largest contributors to core inflation included cooking oil and electronic products, among others. Meanwhile, commodities like household fuel and nonsubsidized fuel are the major contributors to inflation in administered prices.
Additionally, commodities such as red chili, shallots, tomatoes and rice are the dominant contributors to inflation in volatile food prices.
Despite rising geopolitical tensions from the Middle East turmoil, the state budget has shielded many Indonesian consumers from high global energy prices via subsidies, which has helped contain the country’s inflation in the previous months.
An economist has warned that inflation would climb in May and the coming months, arguing that price pressures from the Middle East conflict had not been completely passed through last month.
The recent weakening of the rupiah compounded that pressure by making imported goods, including oil, more expensive in local currency terms.
The rupiah was trading at over Rp 17,800 per dollar on Tuesday, down sharply from around Rp 17,000 in March.
On May 20, the central bank decided to raise its benchmark interest rate by 50 basis points (bps) in a bid to stabilize the rupiah, and blamed the recent depreciation of the currency on external pressure.