Warning! Continued Rupiah Weakness Against US Dollar Begins to Drive Up Goods Prices

The exchange rate of the Rupiah against the US Dollar, which continues to face pressure, has begun to affect the rising prices of goods in Indonesia.

Studies by several domestic economists indicate that inflation in September 2026, which stood at 3.28% year-on-year, has been driven by the effects of Rupiah exchange rate fluctuations against the US Dollar.

BCA’s economist team, in their monthly report titled “CPI: Tossed by the Storm,” revealed that although the impact of exchange rate pressure on imported goods remains relatively limited—as most are industrial inputs—wholesale price inflation has begun to show an increase.

“The increase in wholesale inflation (reaching 6.76% YoY in September compared to 6.18% in August) indicates ongoing input price pressure among producers, which has the potential to spread to consumer prices in the coming months,” stated the BCA report prepared by Samuel Theophilus Artha and Victor George Petrus Matindas on Monday (5/10/2026).

Furthermore, the BCA economist team observed broader price increases in many commodities over recent months, which have caused inflation to rise in both the US and China (even beyond oil-related products).

“These higher prices, combined with the rapid depreciation throughout this year, will act as a double blow for importers,” the BCA economist team noted.

A similar view was expressed by the Permata Bank economic team. In their report, Faisal Rachman, Head of the Macroeconomic Research and Financial Markets Department at Bank Permata, stated that the weakening Rupiah will increase imported goods inflation and raise the cost of imported raw materials.

“This risk is reflected in supply-side inflation exceeding demand-side inflation, indicating an increasing likelihood that rising producer costs, particularly for imported raw materials, will be passed on to consumer prices,” said Faisal.

As is well known, after strengthening last weekend, the Rupiah opened trading on Monday (5/10/2026) significantly weaker against the US Dollar.

According to Refinitiv data, the Rupiah opened at the level of Rp17,950/US, weakeningby0.46.

Meanwhile, the US Dollar Index (DXY), which measures the strength of the greenback against six major world currencies, was observed at 102.030 at 09:00 WIB, strengthening by 0.10%.