Lower fuel prices cushion August’s increases, but rising staples pose challenges for households and businesses.
Indonesia’s inflation remained within the central bank’s target range in August 2026, as cheaper fuel and airfares partly offset rising food and gold prices. The result masks an uneven picture: transport costs eased while several everyday essentials became more expensive.
Consumer prices rose 3.19% from a year earlier and 0.21% from July, according to Statistics Indonesia, the national statistics agency. Bank Indonesia’s inflation target is 2.5%, with a tolerance of one percentage point on either side.
Key annual readings:
- Headline inflation: 3.19%.
- Core inflation: 2.92%, up from July’s 2.76%.
- Volatile food inflation: 4.06%, up from 2.52%.
- Administered-price inflation: 3.32%, down from 3.58%.
Chicken, bird’s-eye chillies and rice drove food inflation. Higher global gold prices lifted jewellery costs, contributing to core inflation. Meanwhile, declining aviation fuel prices and reductions in unsubsidised petrol prices helped bring down airfares and petrol costs.
For restaurants and food retailers, these movements could squeeze margins unless higher purchasing costs can be passed on to customers. Households facing larger grocery bills may also have less room for discretionary purchases. Cheaper transport offers some relief, although its benefits will vary across businesses.
The rise in core inflation deserves attention, but does not by itself establish stronger consumer demand: global commodity prices also contributed.
Bank Indonesia credited monetary policy and coordination with central and regional government inflation-control teams, known as TPIP and TPID, alongside national food-security initiatives. It expects inflation to stay within target through 2027.
The policy challenge is sustaining that stability if fuel-related relief fades. For businesses setting budgets and selling prices, August’s figures suggest that headline inflation alone offers an incomplete guide to the costs they will actually face.