Experts: Maintain food supply and Rupiah stability to anticipate inflation

The think tank Prasasti Center for Policy Studies believes that enhanced measures are necessary to maintain food supplies and the stability of the Rupiah exchange rate to anticipate inflation movements, following price increases that exceeded the 3 per cent level in May 2026.

Halim Alamsyah, a member of the Prasasti Board of Experts and former Deputy Governor of Bank Indonesia, stated that rising inflation must be addressed swiftly and accurately, given that it is occurring amidst a weakening Rupiah and increasing global economic uncertainty. “The tendency for rising inflationary pressure and a narrowing trade surplus are signals that need to be closely monitored and handled promptly,” Halim said in a statement released in Jakarta on Friday.

According to data from the Central Bureau of Statistics (BPS), year-on-year inflation in May 202<0xA0>26 reached 3.08 per cent, an increase from 2.42 per cent in April. He noted that current inflationary pressures are influenced not only by food supply factors but also by the depreciation of the Rupiah, which has the potential to increase the price of imported goods and production costs.

Consequently, Halim believes that inflation control and exchange rate stability require closer coordination between monetary, fiscal, and financial authorities. “The government’s strategy to continue driving economic activity will be tested by the market through the ability of the government and Bank Indonesia to maintain Rupiah and inflation stability,” he added. He further emphasised that increasing domestic foreign exchange reserves and maintaining policy credibility are vital factors in mitigating economic uncertainty.

Piter Abdullah, Policy and Program Director at Prasasti, noted that current inflation is still dominated by volatile food components, such as red chillies, tomatoes, and shallots, which are highly dependent on weather and supply factors. “Our core inflation remains low. Therefore, the current price pressures are temporary rather than structural,” said Piter.

BPS data shows that red chillies were the primary contributor to inflation with a price increase of 25.64 per cent, followed by tomatoes at 9.82 per cent and shallots at 6.65 per cent. Prasasti hopes the government will act quickly to anticipate ongoing inflationary pressures, as they could narrow the space for economic growth amidst Rupiah weakness and high global uncertainty.

Stabilising food prices, strengthening domestic supply, and maintaining confidence in the Rupiah are considered essential steps to prevent inflationary pressures from evolving into a larger risk to the national economy. On the other hand, Prasasti expressed appreciation for Indonesia’s encouraging export performance. BPS recorded that exports from January to April 2026 reached 92.15 billion USD, growing by 5.48 per cent year-on-year, with a sharp surge in April of 21.98 per cent. This export increase was supported by processed industrial products and downstream products, such as processed nickel to China and crude palm oil (CPO).