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Timor-Leste annual inflation stays at -0.1% in September as food prices fall

Published Data as of Timor-LesteMacro & households
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Key points

Implications for lenders

For lenders in Timor-Leste, an annual inflation rate of -0.1% means borrowers' nominal incomes are unlikely to grow from prices alone, so affordability checks may rely on current income rather than expected rises. Higher transport costs of +6.5% may squeeze cash flow for small trade and delivery borrowers, which collections teams may watch.

Implications

ExecutivesWith prices flat, nominal loan rates in Timor-Leste translate almost fully into real borrowing costs for households and small firms.
InvestorsLow inflation leaves dollarised Timor-Leste with little price-driven growth in nominal incomes or deposits, which may limit balance-sheet growth for lenders.
OperatorsLower food prices ease pressure on household budgets, while higher transport costs weigh on borrowers who commute or run delivery and trade businesses.

Facts

Timor-Leste's National Institute of Statistics (INETL) reported on 21 October 2026 that the All Groups consumer price index changed by -0.1% over the twelve months to September, unchanged from -0.1% in August; +0.5% in July 2026. 1 On the month, prices rose +0.1%, after -0.3% in August 2026. 2

Food and non-alcoholic beverages were -0.8% on a year earlier; the monthly fall was led by lower rice prices. 3 Transport was the main upward pressure at +6.5%. 4 In Dili, prices were +0.1% on a year earlier, against -2.3% in Baucau. 5 The August annual rate, released in September, was -0.1%, down from +0.5% in July 2026. 6

Analysis

Prices have now been flat to slightly lower for two months, after 0.5% in July. 7 That is below the finance ministry's estimate of 0.7% for 2026 as a whole, in the 2027 budget documents, and well below the IMF's 2026 forecast of 2.1%. The ministry expects 1.8% in 2027.

Timor-Leste uses the US dollar, so imported food prices and the dollar drive much of the index. Singapore, also an import-dependent economy, shows a very different picture: its core inflation was 2.2% in August. 8 In Timor-Leste the pressure is concentrated in transport, while food has become cheaper.

Counterpoints and uncertainties

Monthly CPI in a small economy is volatile, and a single rice price move can shift the annual rate. INETL's release also contains an internal inconsistency: its tradeable/non-tradeable commentary cites a different twelve-month rate from the main table, so the figures may be revised. Transport inflation could feed into other prices with a lag, and the finance ministry and IMF both expect inflation to pick up.

Key figures

  1. Headline CPI inflation, year on year (September 2026): -0.1% (unchanged from -0.1% in August; +0.5% in July 2026)
    The release's tradeable/non-tradeable commentary cites a different 12-month rate from its Table 1; the figure here is the headline and Table 1 value.
    . 12-month change in the national All Groups CPI (INETL, Aug 2018 = 100). Timor-Leste, national. Basis date: 30 Sep 2026. Source: INETL: Consumer Price Index Timor-Leste, September 2026 (2026-10-21)
  2. Headline CPI, month on month (September 2026): +0.1% (after -0.3% in August 2026). Monthly change in the national All Groups CPI (INETL). Timor-Leste, national. Basis date: 30 Sep 2026. Source: INETL: Consumer Price Index Timor-Leste, September 2026 (2026-10-21)
  3. Food and non-alcoholic beverages CPI, year on year (September 2026): -0.8%. 12-month change in the food and non-alcoholic beverages CPI group (INETL). Timor-Leste, national. Basis date: 30 Sep 2026. Source: INETL: Consumer Price Index Timor-Leste, September 2026 (2026-10-21)
  4. Transport CPI, year on year (September 2026): +6.5%. 12-month change in the transport CPI group (INETL). Timor-Leste, national. Basis date: 30 Sep 2026. Source: INETL: Consumer Price Index Timor-Leste, September 2026 (2026-10-21)
  5. Dili CPI, year on year (September 2026): +0.1% (against -2.3% in Baucau). 12-month change in the Dili All Groups CPI (INETL). Timor-Leste, Dili. Basis date: 30 Sep 2026. Source: INETL: Consumer Price Index Timor-Leste, September 2026 (2026-10-21)
  6. Headline CPI inflation, year on year (August 2026): -0.1% (down from +0.5% in July 2026). 12-month change in the national All Groups CPI (INETL, Aug 2018 = 100). Timor-Leste, national. Basis date: 31 Aug 2026. Source: IndexBox (citing INETL): Timor-Leste August 2026 CPI
  7. Headline CPI inflation (year on year): 0.5%
    Monthly change was +0.2% in July; the separate Dili index rose 1.1% year on year.
    . 12-month change in the national All Groups CPI (INETL, Aug 2018 = 100). Timor-Leste, national. Basis date: 31 Jul 2026. Source: INETL: Consumer Price Index Timor-Leste, July 2026 (2026-08-18)
  8. MAS core inflation: 2.2% (up from 2.0% in July)
    Excluding accommodation and private transport.
    . Year-on-year change in MAS core CPI. Singapore, national. Basis date: 31 Aug 2026. Source: MTI: Consumer Price Developments in August 2026 (2026-09-23)

Sources

  1. INETL: Consumer Price Index Timor-Leste, September 2026 (2026-10-21)primary
  2. INETL: Consumer Price Index September 2026 (release page)primary
  3. INETL: Consumer Price Index Timor-Leste, July 2026primary
  4. IndexBox (citing INETL): Timor-Leste August 2026 CPI
  5. TATOLI (2026-10-14): Timor-Leste prevê crescimento não petrolífero de 4,6% em 2027
  6. IMF concludes 2026 Article IV mission to Timor-Leste (via Mirage News)
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Reports are for information only and are not investment advice.

A Japanese version of this article is available: 日本語版

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