Indonesia's August CPI inflation at 3.19%, nearing the 3.5% ceiling of BI's target
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Key points
- August CPI rose 3.19% year on year, 0.21% month on month and 1.86% year to date (BPS, 1 September).
- Core inflation was 2.92%; North Maluku posted the highest provincial rate at 5.28%.
- Inflation is inside BI's 2.5% ± 1% target but close to the ceiling, limiting room for rate cuts.
Implications
Facts
Headline: the consumer price index (index level 111.97) rose 3.19% year on year in August 2026, 0.21% month on month and 1.86% year to date. Basis: August 2026. Source: Statistics Indonesia (BPS) press release, 1 September 2026. 1
Core: core inflation was 2.92% year on year, 0.21% month on month and 1.97% year to date. Same source.
Regional dispersion: by province, year-on-year inflation was highest in North Maluku at 5.28% and lowest in North Kalimantan at 2.17%. Same source.
Target: Bank Indonesia's (BI) inflation target for 2026–2027 is 2.5% ± 1% (ceiling 3.5%). Source: ANTARA report on the BI board meeting of 23 September. 2
Analysis
Regionally, Indonesia's 3.19% sits between Malaysia (January–July average 1.8%, BNM) and the Philippines (August 6.1%, PSA). The gap between headline and core (0.27 pp) suggests the recent overshoot comes mainly from volatile items such as food. With only 0.31 pp of headroom to the target ceiling, BI kept its policy rate at 5.75% in September.
Counterpoints and uncertainties
Inflation of 3.19% is within the target band and not at a level that can be said to seriously erode household repayment capacity. Whether a single month's overshoot persists requires data from September onward.
Key figures
- Headline CPI inflation (BPS): 3.19%. Year-on-year change in the consumer price index. Indonesia, national. Basis date: 31 Aug 2026. Source: BPS: Inflasi year-on-year (y-on-y) pada Agustus 2026 sebesar 3,19 persen
- BI inflation target, 2026–2027: 2.5% ± 1%. Bank Indonesia CPI inflation target band. Indonesia, national. Basis date: 23 Sep 2026. Source: ANTARA: BI-Rate kembali bertahan di level 5,75 persen pada RDG September
Sources
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A Japanese version of this article is available: 日本語版