BI Says Central Bank and Government Synergy Keeps July 2026 Inflation in Check

Bank Indonesia (BI) has stated that Consumer Price Index (CPI) inflation in July 2026 remained within the target range, thanks to close synergy in inflation control between the central bank and central and regional governments. This synergy is embodied in the Central and Regional Inflation Control Teams (TPIP and TPID) and the implementation of the National Food Security Programme. In addition, well-anchored inflation was supported by consistent monetary policy.

Executive Director of BI’s Communications Department, Ramdan Denny Prakoso, said in a statement in Jakarta on Monday that BI is confident inflation will remain under control within the target range of 2.5 per cent plus or minus 1 per cent (1.5–3.5 per cent) in 2026 and 2027. Based on data released by Statistics Indonesia (BPS) on Monday, the CPI in July 2026 recorded a monthly deflation of 0.14 per cent (month-to-month/mtm), bringing annual CPI inflation to 2.88 per cent (year-on-year/yoy), lower than the previous month’s realisation of 3.34 per cent (yoy).

“Core inflation in July 2026 was recorded at 0.14 per cent (mtm), lower than the previous month’s realisation of 0.23 per cent (mtm). The development of core inflation was influenced by well-anchored inflation expectations amid persistently high global commodity prices,” Ramdan said, as quoted from his statement on 4 August 2026. Commodities that dominantly contributed to the core inflation component included primary school fees, motorcycles, lubricants/engine oil, kindergarten fees, mobile phones, and tutoring fees. On an annual basis, core inflation in July 2026 was recorded at 2.76 per cent (yoy), stable compared to the previous month’s realisation of 2.76 per cent (yoy).

Meanwhile, the volatile food group in July 2026 experienced a deflation of 1.68 per cent (mtm), lower than the previous month’s inflation of 0.14 per cent (mtm). The deflation in the volatile food group was mainly contributed by shallots, cayenne pepper, and red chillies, driven by increased supply, particularly in production centres. On an annual basis, the volatile food group recorded inflation of 2.52 per cent (yoy), lower than the previous month’s realisation of 5.58 per cent (yoy). “Going forward, volatile food inflation is expected to remain under control, supported by close synergy in inflation control between Bank Indonesia and the TPIP and TPID, as well as the implementation of the Inflation Control and Food Welfare Movement (GPIPS),” Ramdan said.