Indonesia Inflation Edges Down to 3.23%, Core Slows; Nine-Month Trade Surplus Narrows

By The Edge Research Team

Indonesia’s annual consumer inflation edged down to 3.23% in October from 3.28% in September, Statistics Indonesia said on 2 November, while core inflation slowed more sharply.

For rupiah bond holders, the bigger move was in core inflation, which fell to 2.56%, close to the 2.5% midpoint of the official target. In The Edge’s reading, the risk sits upstream, since wholesale prices rose 7.00% on the year in October, more than double the consumer rate, and that gap can feed through to shop prices with a lag.

The consumer price index stood at 112.56 in October, against 112.31 a month earlier. Prices rose 0.22% on the month, slower than September’s 0.30%. Since December, they are up 2.40%.

Core inflation slows faster than the headline

Core inflation eased to 2.56% year on year from 2.84% in September. That drop of 0.28 percentage points compares with a fall of only 0.05 points in the headline rate.

The gap between headline and core therefore widened to 0.67 points in October, from 0.44 points in September. With the headline above core, prices outside the core measure are rising faster than the headline itself.

The latest split from Bank Indonesia is for September, when it put administered price inflation at 3.25%, easing on lower airfares. Volatile food inflation rose to 5.03% that month, which the bank linked to lower output in several production hubs after weather disruptions.

October inflation against September (in %)

Consumer price index: 112.31 in September, 112.56 in October.

The government’s target for 2026 is 2.5%, with a band of 1 point either side. That sets a range of 1.5% to 3.5%. October’s headline sits 0.27 points below the ceiling, and core is 0.06 points above the midpoint.

Of the ten monthly readings this year, January’s 3.55% and February’s 4.76% broke above the band’s ceiling. The low point was April at 2.42%, and eight of the ten readings were above 3%.

Headline inflation, year on year (in %)

Each month as published in its own release.

Sulawesi Utara runs hottest, Jakarta coolest

Regional prices diverge widely. Sulawesi Utara had the highest provincial rate at 8.07%, up from 7.59% in September. Jakarta had the lowest at 2.52%, leaving a spread of 5.55 points between the two.

At the city and regency level, Minahasa Utara regency led at 10.16%, up from 9.05% a month earlier. Tangerang municipality had the lowest rate at 2.13%. In September the lowest province had been Sumatera Selatan, at 2.55%.

Wholesale and producer prices rise faster than shop prices

The statistics office’s wholesale price index rose 7.00% on the year in October and 0.40% on the month. The section covering ores and minerals, electricity, gas and water rose most, by 16.07%.

Higher prices for industrial diesel, liquefied petroleum gas, rice, rubber gum and lubricating oils drove the annual increase. Construction materials rose 9.59% on the year, with asphalt, reinforcing steel, sand, cement and crushed stone dearer.

Producer prices tell a similar story. The index across nine sectors rose 6.94% on the year in the third quarter and 1.50% on the quarter. Mining and quarrying led with a 22.19% annual rise, while manufacturing rose 6.12%.

Faster import growth cuts the nine-month surplus to $10.61 billion

September exports rose 11.87% on the year to $27.59 billion. Imports grew faster, up 18.41% to $24.23 billion. The monthly surplus came to $3.36 billion, slightly below August’s $3.55 billion.

Against August’s first published figures, exports rose 3.7% on the month and imports 5.1%. Non-oil and gas goods supplied 96.6% of September exports, while oil and gas made up 13.5% of imports.

September trade by type (in $ billions)

Oil and gas columns and balances are derived from the published totals.

The nine-month picture is weaker. Exports rose 5.58% to $221.23 billion in January to September. Imports climbed 19.67% to $210.63 billion. Import growth thus exceeded export growth by 14.09 points.

That cut the surplus to $10.61 billion, from $33.48 billion a year earlier as first published. The non-oil and gas surplus shrank to $34.21 billion from $47.20 billion. The oil and gas deficit widened to $23.60 billion, from $13.72 billion.

Trade balance, January to September (in $ billions)

2025 figures as first published in November 2025.

Oil and gas imports totalled $32.57 billion over the nine months, or 15.5% of all imports. Oil and gas exports came to $8.96 billion. Non-oil and gas imports rose 16.92%, well above the 6.30% rise in non-oil exports.

Month by month, the balance was thin through the middle of the year. Trade ran deficits in May and June, and April and July left surpluses of $0.13 billion or less, before August and September each topped $3 billion.

Monthly trade, first published (in $ billions)

Each month as first published; later releases may revise them.

The central bank keeps its policy rate at 5.75%

Bank Indonesia’s board left the BI-Rate at 5.75% at its meeting that ended on 21 October. It kept the lending facility rate at 6.50% and raised the deposit facility rate to 5.00%. The policy rate now stands 2.52 points above October’s headline inflation.

The central bank tied the decision to stabilising the rupiah and keeping inflation within its target range. The currency stood at Rp17,985 per dollar on 20 October, and was 0.61% weaker than at the end of September. Reserves were $146.3 billion at the end of September, equal to 5.3 months of imports. The bank projects economic growth of 4.9% to 5.7% this year.

What to watch:

5 November: Statistics Indonesia publishes its next economic growth release.

Figures are from BPS-Statistics Indonesia’s releases of 2 November 2026 on October 2026 consumer prices, September 2026 exports and imports, October 2026 wholesale prices and third quarter 2026 producer prices, read with its September 2026 consumer price release, its January 2026 consumer price release, its August 2026 and September 2025 trade releases and its earlier monthly releases this year; and from Bank Indonesia’s press release of 21 October 2026 on its board meeting, with the inflation target as published by Bank Indonesia; percentages, shares, spreads and balances not attributed to a source are The Edge’s calculations.

Sources: BPS-Statistics Indonesia, Bank Indonesia, The Edge.

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