May inflation forecast to rise to 2.94% amid rupiah weakness and energy price pressures

JAKARTA, KOMPAS.com - Indonesia’s inflation rate is projected to rise in May 2026 amid pressures from the rupiah’s depreciation, rising global energy prices, and heightened consumer demand ahead of Eid al-Adha. Permata Bank chief economist Josua Pardede forecasts May 2026’s month-on-month inflation at 0.14%, slightly higher than April’s 0.13%. Year-on-year (YoY) inflation is forecast to increase to 2.94% from 2.42% in April 2026. ‘For May 2026 inflation, we expect a slight monthly rise and a more pronounced annual increase. Thus, the trend is not weakening but slightly rising as cost pressures become more apparent to consumers,’ Josua told Kompas.com on Tuesday, 2 June 2026. The rupiah’s depreciation has made imported raw materials more expensive, while persistently high global energy prices have further increased costs for businesses. Additionally, seasonal demand ahead of Eid al-Adha is expected to push up prices of several food commodities. ‘Pressure stems from higher raw material costs, rupiah depreciation driving up imported input prices, still-elevated energy prices, and seasonal demand ahead of Eid al-Adha,’ Josua said. Meanwhile, government-regulated prices (administered prices) could add further pressure. Increases in non-subsidised fuel, energy, and airfare tariffs are still possible due to high jet fuel and energy costs. Furthermore, core inflation is also forecast to rise. Josua predicts core inflation will increase from 2.44% in April to 2.50% in May 2026. The rise is driven by higher cooking oil prices and non-food input costs due to rupiah depreciation.