BI Strategy to Mitigate High Inflation Risk from Prolonged El Nino

Bank Indonesia (BI) has prepared a number of inflation control strategies to mitigate the impact of the El Niño phenomenon. The mitigation is intended to curb its effect on food price surges until the end of 2026.

BI Deputy Governor Rizky Perdana Gozali revealed that El Niño is expected to last until October 2026, particularly in eastern Indonesia. This condition has the potential to disrupt food production while increasing production costs.

“Of course we must be vigilant going forward, especially regarding the risks from this El Niño. El Niño is expected to strengthen until October 2026 in eastern Indonesia, and will put pressure on production costs. Therefore, the inflation control strategy will continue to focus on supply availability and smooth distribution,” said Rizky at a press conference following the BI Board of Governors Meeting in Jakarta on Wednesday, 19 August 2026.

BI will pay attention to rice, chilli, and shallot commodities, which are vulnerable to price pressure due to production disruptions. A number of strategies prepared include the implementation of digital farming and precision agriculture, strengthening post-harvest handling and food downstreaming, as well as strengthening inter-regional cooperation based on food surplus and deficit.

BI will also optimise more mature food distribution facilitation, transport cost subsidies, and low-cost market movements based on the principles of the right commodity, right location, and right time.

These measures are carried out through the Central Inflation Control Team and Regional Inflation Control Teams, including through the Inflation Control and Prosperous Food Movement.

Rizky said that inflation control no longer relies solely on market operations, but is also directed at strengthening food production and distribution from upstream to downstream.

As is known, Consumer Price Index inflation in July 2026 was recorded at 2.88 percent year-on-year, easing compared to June 2026 which reached 3.34 percent year-on-year.

The decline was mainly supported by the volatile food group, whose inflation slowed to 2.52 percent year-on-year. This development was influenced by harvests of commodities such as chillies and shallots. Nevertheless, BI remains wary of potential food price pressures in the coming period due to weather conditions.