BPS Reveals Causes of 3.48% Inflation: It Turns Out to Be the Effect of Electricity Tariffs

Indonesia’s Central Statistics Agency (BPS) recorded annual inflation at 3.48% in March 2026. This figure has eased from the previous month’s 4.76%. BPS explained that the high annual inflation rate in March 2026 was due to the slight remaining influence of electricity tariff normalisation.

“In January-February 2025, the government implemented an electricity tariff discount policy, so the price level during that period was below the normal trend and suppressed the CPI or caused deflation in electricity tariffs. Subsequently, although prepaid electricity tariffs returned to normal in March 2025, discounts for postpaid continued, so we now see that in March 2026, inflation is recorded higher, even though the actual prices have returned to their original condition,” explained BPS Head Amalia Adingggar Widyasanti in a written statement in Jakarta on Wednesday (1/4).

Amalia explained that the annual inflation for electricity tariffs in March 2026 reached 26.99%. The ongoing low-base effect is evident from the high annual inflation in the housing, water, electricity, and household fuel group at 7.24%, with an inflation contribution of 1.08%.

“Based on BPS simulations, if there had been no electricity discount policy in January-February 2025, then inflation in March 2026 would have been around 2.48%,” Amalia revealed.

Amalia explained that the share of postpaid electricity customers in 150 CPI regencies/cities is 38.16% of the total PLN household customers. Therefore, the electricity tariff discount policy for postpaid in March 2025 caused the low-base effect in March 2026 to be not as large as in January and February 2026.

This difference is related to the policy coverage: in January 2025, the discount was only enjoyed by prepaid customers; February 2025 covered prepaid and postpaid (for January 2025 usage), while March 2025 was only enjoyed by postpaid customers (for February 2025 usage).