Indonesia CPI Preview: CPI to edge up in October

Indonesia’s October consumer price index (CPI) is expected to show a modest acceleration, with headline inflation forecast to rise to 2.7% y/y, up from 2.6% y/y in September. The anticipated uptick will likely be driven by higher food and fuel prices, along with seasonal factors, although core inflation is expected to remain contained.

Headline CPI has remained comfortably within Bank Indonesia’s 2.5% ±1% target band throughout 2025, but recent data points to emerging price pressures. Food inflation, which had already begun to pick up in September, is expected to intensify further in October due to seasonal factors and supply constraints. Additionally, the government’s adjustment in fuel prices—particularly for non-subsidised categories—could add upward momentum to monthly inflation.

From a policy perspective, the expected rise in inflation to 2.7% will not materially alter BI’s position. The central bank has delivered four 25bp rate cuts in 2025, bringing the benchmark 7-day reverse repo rate to 4.75%. While the October CPI print could interrupt the disinflation trend observed since Q1, it is unlikely to push BI back into a tightening mode—especially with the rupiah remaining relatively stable and GDP growth on track to meet the government’s 5% annual target.

Looking ahead, price risks will remain tilted to the upside through the rest of Q4 due to potential food supply disruptions and the global oil price outlook. However, barring any major shocks, inflation is likely to hover in the 2.5–3.0% range through year-end—keeping monetary policy space open, albeit limited.