Inflationary pressures: A vendor prepares his merchandise at a roadside stall in Jakarta. The govenrment’s aim is to support consumer spending and boost GDP growth to 5% following a disappointing 1Q25. — AFP
JAKARTA: Indonesia’s inflation edged up in June as food prices rose amid Aidiladha festivities and the start of school holidays, both of which boosted household consumption.
Statistics Indonesia (BPS) reported yesterday that the consumer price index (CPI) rose by 0.19% month-on-month in June, following a 0.37% monthly deflation in May.
This pushed the year-to-date inflation to 1.38%. Food, beverages and tobacco were the main drivers of June inflation, contributing 0.13 percentage points to the monthly figure.
This was primarily due to higher prices for rice, which added 0.04 percentage points, along with bird’s eye chili, shallots and tomatoes.
As a result, volatile food prices rose 0.77% month-on-month after a sharp 2.48% deflation in May.
Transportation costs contributed an additional 0.01 percentage points to June inflation, driven by a 5.81% jump in airfares.
However, this was partly offset by lower prices for sea and train travel, which fell by 16.96% and 4.2%, respectively, due to holiday discounts.
On May 23, Coordinating Economic Minister Airlangga Hartarto unveiled a new stimulus package aimed at supporting consumer spending in the second quarter (2Q25) and boosting gross domestic product (GDP) growth to 5% following a disappointing 1Q25.
The initiative, effective in June and July, includes discounts on train, airplane and ferry tickets, as well as toll road discounts for around 110 million eligible drivers.
Nevertheless, administered prices still rose by 0.09% month-on-month, following a 0.02% decline in the previous month.
The increase was driven by rising costs of household fuel, airfares and machine-rolled clove cigarettes.
Core inflation, which excludes volatile and administered prices, increased by 0.07% in June, nearly unchanged from the 0.08% rise recorded in May.
On an annual basis, headline inflation climbed to 1.87%, up from 1.6% in May, though still below the 2.51% recorded in June last year.
The “personal care and other services” category saw the highest annual increase at 9.3%, largely driven by rising gold jewellery prices, which have posted steady monthly gains since late 2023.
While global gold prices and firm domestic demand may continue to exert inflationary pressure, the overall rate remains within Bank Indonesia’s target range of 1.5% to 3.5%.
A stable rupiah following the Israel-Iran truce has created room for supportive policy, according to Bank Danamon economist Hosianna Evalita Situmorang.
“The upcoming July stimulus will play a crucial role in sustaining household spending as economic momentum softens in the second half of the year (2H25),” she said on Tuesday.
Aside from gold, volatile food prices and airfares have consistently emerged as key inflationary pressures throughout the 1H25.
In a separate report, also released by BPS on Tuesday, foreign tourist arrivals to Indonesia rose by 14% year-on-year in May to 1.31 million people.
Visitors from Malaysia, Australia and Singapore dominated the monthly tally.
In total, 5.63 million tourists entered the country in the first five months of the year, a 7.44% increase compared with the same period in 2024. — The Jakarta Post/ANN
