Bank Indonesia continues to monitor inflation risks from global oil price surge
Bank Indonesia (BI) continues to monitor domestic inflation risks arising from increases in global oil prices that could raise transportation and production costs, including food, following heightened tensions between Iran, the United States and Israel.
Deputy Governor Aida S. Budiman explained that the central bank will continue to monitor current indicators relating to global conditions that could affect the domestic economy through three main channels, including commodity price developments.
“We are now beginning to see how oil prices, gold prices are developing, and it will also be important to track food prices. If oil prices increase, there will certainly be impacts on transportation costs and other areas,” said Aida in Jakarta on Monday.
She added that the central bank also continues to monitor financial market conditions that could affect the exchange rate, which could in turn impact import prices and domestic price stability.
“Bank Indonesia’s commitment remains to maintain stability. We continue to be present in the market to ensure exchange rate stability is maintained, including inflation,” said Aida.
For context, the Consumer Price Index (CPI) inflation in February 2026 rose to 4.76 per cent year-on-year, influenced partly by a low base effect, as the government had implemented an electricity tariff discount policy the previous year that drove deflation.
Bank Indonesia views the domestic economic outlook for 2026 as remaining sound. Aida stated that the momentum of economic growth, particularly in the first quarter, should be utilised optimally given the number of National Religious Holidays (HBKN) during this period that boost consumer spending.
Additionally, based on projections, government consumption is also expected to increase. The government has committed to realising various expenditures in the first quarter to ensure programmes run smoothly.
“If that happens, private consumption will certainly increase, driving up domestic demand and other production,” said Aida.
Strengthening growth drivers from within the domestic economy is viewed as the main foundation for sustaining economic stability and momentum.
Overall, Aida stated that the Indonesian economy remains sound. After growing 5.11 per cent in 2025, BI projects 2026 economic growth in the range of 4.9–5.7 per cent. Inflation is also projected to remain controlled within the target of 2.5 ± 1 per cent.
“We will certainly continue further monitoring of the impacts through the three main channels that BI watches,” said Aida.
Meanwhile, backed by credit growth recorded at 9.69 per cent at the end of 2025 and increasing to 9.96 per cent in January 2026, performance throughout 2026 is projected to reach the target in the range of 8–12 per cent.