Purbaya Confident in Indonesia's Controlled Inflation, OECD Forecasts Rise to 3.4 Percent
JAKARTA - Finance Minister Purbaya Yudhi Sadewa has emphasised that Indonesia’s inflation is still under control, even as the Organisation for Economic Co-operation and Development (OECD) projects rising price pressures in 2026.
In its OECD Economic Outlook, Interim Report: Testing Resilience March 2026 edition, Indonesia’s inflation is estimated to rise from 1.9 percent in 2025 to 3.4 percent in 2026, before easing back to 2.6 percent in 2027.
“Energy price surges will increase business costs and boost consumer inflation,” the OECD stated in its report, quoted on Tuesday (31/3/2026).
The OECD assesses that Indonesia’s inflationary pressures are tied to global dynamics, particularly rising energy prices and escalating geopolitical tensions.
The escalation of conflicts in the Middle East, including following the Israel-US attack on Iran, is said to have triggered disruptions in global energy and fertiliser supplies.
This situation is driving up world oil and gas prices, especially due to interruptions in strategic routes like the Strait of Hormuz and damage to energy infrastructure. As a result, production costs are rising, and global inflation is being pushed higher.
“Inflation data for February appears high, at 4.64 percent headline alone, Sir,” Purbaya said during the Full Cabinet Meeting at the State Palace in Jakarta on Friday (13/3/2026), in the presence of President Prabowo Subianto.
According to him, this figure does not reflect the true situation because it is influenced by technical factors, namely the electricity subsidy calculation base. If that component is excluded, February 2026 annual inflation is around 2.59 percent.
“If we remove the electricity subsidy data from January-February last year, our inflation is actually around 2.59 percent, Sir,” Purbaya stated.
He stressed that a proper understanding of inflation data is crucial so that the government does not make misguided policy decisions.
After all, perceptions of excessively high inflation could lead to policies that hinder economic growth.
On the global front, the OECD projects G20 countries’ inflation to rise from 3.4 percent in 2025 to 4 percent in 2026.
Meanwhile, world economic growth is expected to slow to 2.9 percent in 2026 from 3.3 percent the previous year, before a slight increase to 3.0 percent in 2027.
Nevertheless, the OECD forecasts that inflation in several developing countries, including Indonesia, will moderate again in 2027. Indonesia’s growth prospects are also seen as relatively stable, supported by domestic consumption and fiscal stimulus.