(1.) Indonesian Inflation Rises to 3.34%
Indonesia’s annual inflation rate in June 2026 reached 3,34%up from 3,08% in May 2026. This figure is higher than economists’ estimates and is close to the upper limit of the inflation target set by Bank Indonesia, namely 1,5%–3,5%.
The main causes of rising inflation:
(a.) Food prices increase.
(b.) Transportation costs increase due to increases in non-subsidized fuel prices.
(c.) More expensive logistics costs.
(d.) The rupiah exchange rate weakens against the US dollar, so imported goods become more expensive.
(2.) Indonesia Experiences First Trade Deficit in 6 Years
Indonesia took note trade deficit of US$1.61 billion in May 2026. This is the first deficit since around 2020. Previously, Indonesia almost always recorded a trade surplus.
Causes of trade deficit:
(a.) Exports of commodities such as coal and steel have decreased.
(b.) Imports increased sharply, especially imports of refined oil and industrial raw materials.
(c.) High global energy prices increase the value of Indonesia’s imports.
Impact on the Indonesian Economy
(a.) Bank Indonesia has raised interest rates several times to prevent the weakening of the rupiah and control inflation.
(b.) The business world faces higher operational costs.
(c.) The public can experience an increase in the prices of daily necessities.
(d.) Investors are becoming more careful about Indonesia’s economic prospects in the short term.
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