BI Warns of New Threat Looming Over Indonesia

Bank Indonesia (BI) has warned that the risk of an intensifying El Niño, which exacerbates the dry season, could reduce horticultural harvest productivity in eastern Indonesia. Deputy Governor Ricky Perdana Gozali stated that BI, together with its 46 representative offices, is proactively coordinating with the Central Inflation Control Team (TPIP) and Regional Inflation Control Teams (TPID) through the National Movement for Food Inflation Control (GNPIP) to mitigate the impact on food inflation. “This is to maintain supply, smooth distribution, and price stability across various regions,” he emphasised during the presentation of the BI Board of Governors Meeting results on Thursday (18/6/2026).

Deputy Governor Aida S. Budiman previously noted that inflation risks are also emerging from the spillover effects of global geopolitical turmoil and rising oil and commodity prices, which could trigger imported inflation. She identified weather disruptions, specifically the El Niño phenomenon in Indonesia, as a second key alert, adding that efforts are already underway to strengthen volatile food supplies through coordination with regional TPIDs. She also highlighted the risk from potential changes to non-subsidised fuel prices for Pertamax and Pertamax Turbo, estimating their contribution to inflation at 0.25%.

Despite these emerging risks, Governor Perry Warjiyo assured that inflation over the next two years will remain within the target range set by BI and the government. “This is the consideration behind the BI Rate as a forward-looking, pre-emptive step for 2026-2027 to keep the global impact on inflation under control. Of course, this step relies on central and regional synergy,” he said.