BI says non-subsidised fuel price hike could contribute 0.25 percent to inflation
Jakarta (ANTARA) - Bank Indonesia (BI) Deputy Governor Aida S. Budiman stated that the rise in non-subsidised fuel prices is predicted to contribute 0.25 percent to inflation, but the central bank remains optimistic that the inflation rate will be maintained within the 1.5–3.5 percent range.
She noted that non-subsidised fuel prices will continue to fluctuate as a consequence of global geopolitical dynamics, with Pertamax and Pertamax Turbo experiencing increases of up to Rp4,000 per litre, whilst Dexlite and Pertamina Dex saw decreases of around Rp3,000 per litre.
“Of course, these non-subsidised fuel prices will fluctuate depending on global prices. For now, our calculations suggest it contributes approximately 0.25 percent to inflation,” Aida said during an online press conference for the announcement of the June 2026 Monthly Board of Governors Meeting in Jakarta on Thursday.
Beyond the fuel price increase, she also highlighted the potential for imported inflation due to rising global commodity prices, such as fertiliser, amid ongoing geopolitical tensions in several regions. However, the central bank is optimistic that fertiliser prices can be kept in check because domestic production stock is still sufficient to meet farmers’ needs.
In addition to geopolitical dynamics, Aida explained that the domestic inflation rate is also influenced by the weather, with the current dry season potentially impacting volatile food commodity prices, including foodstuffs. To address food inflation, she affirmed that BI will continue to coordinate with various stakeholders through the Regional Inflation Control Teams (TPID) and the Central Inflation Control Team (TPIP).
“With all these factors, the inflation projection is indeed starting to experience an increase, but everything remains within the target of 2.5 plus minus 1 percent. So at the highest, our inflation is at 3.5 percent. This is still within those targets,” Aida S. Budiman stated.
On the same occasion, BI Deputy Governor Ricky P. Gozali reported that volatile food inflation in May 2026 surged to 6.24 percent year-on-year (yoy), while the overall annual inflation rate was recorded at 3.08 percent yoy. He said the impact of volatile food inflation is strongly felt in several regions, noting that the inflation rate in 25 provinces remains within the target range, but the rate in 13 other provinces has begun to exceed the limit.
“For instance, in West Papua the inflation rate is 5.94 percent, then in Aceh 5.12 percent, and in Central Kalimantan 4.55 percent,” Ricky said. He stated that food commodities are the largest contributor to inflation due to rising horticultural prices, including red chillies, shallots, and bird’s eye chillies.
BI, together with its 46 representative offices, is synergising with local governments through the TPIP, TPID, and the Inflation Control and Prosperous Food Movement Programme (GPIPS) to mitigate the inflationary impact. “These efforts are aimed at maintaining supply availability, smooth distribution, and food price stability across various regions,” Ricky Gozali concluded.