Oil Prices Blamed for Trade Deficit, Purbaya Confirms Inflation Remains Under Control
Finance Minister Purbaya Yudhi Sadewa has assessed that Indonesia’s trade deficit in May 2026 was primarily triggered by a swelling oil and gas deficit due to rising global oil prices. Despite this, the minister confirmed that the condition has not yet disrupted inflation stability, as core inflation remains at a controlled level.
Purbaya explained that Indonesia still relies on oil and gas imports, so the surge in global oil prices directly increases the value of imports and widens the trade deficit. According to him, this condition is influenced more by price factors than by a weakening of domestic economic fundamentals.
“I suspect the trade deficit is because we import oil and gas, and oil prices have risen,” Purbaya said in Jakarta on Wednesday (1/7).
He emphasised that cumulatively, Indonesia’s trade performance remains quite good. Throughout January to May 2026, a non-oil and gas surplus of approximately US$16.31 billion was still able to largely offset the oil and gas deficit of around US$12.28 billion, resulting in an overall trade surplus of about US$4.03 billion.
Purbaya is optimistic that pressure on the trade balance and inflation will ease as global oil prices decline. He also expects that fuel price adjustments will occur gradually, so the pressure from volatile price components will not last long.
“I hope that after global oil prices fall, Pertamax prices will also gradually decrease in line with global oil prices. So, inflationary pressure will soon diminish,” he said.
He added that Indonesia’s core inflation component in June 2026 was recorded at 2.76% year-on-year, contributing 1.77% to headline inflation. According to him, the increase in inflation was caused more by volatile price components, such as oil, fuel, and food, rather than a surge in public demand. The minister believes that this temporary price pressure will ease in the coming months as commodity prices normalise.
“Core inflation is 2.76%, which is still relatively under control. So the increase is not due to demand growing too fast, but rather because of fluctuating prices, and that should disappear in the next few months,” he explained.
On a separate note, Purbaya stressed the importance of maintaining fiscal discipline amidst various global economic pressures. He said the government must not only pay attention to the size of the budget deficit but also ensure that fiscal management adheres to the plan set a year earlier.