Tim Riset Ekonomi dan Industri BCA

  

Indonesia’s CPI inflation reached 3.34% YoY (0.44% MoM) in Jun-26, accelerating from 3.08% YoY (0.28% MoM) in May 2026. The accelerating inflation figure is unsurprising, given the Rupiah’s continued weakening, which pushed up imported goods prices, and still-elevated global oil prices last month. 

 

Administered prices saw their sharpest increase (1.41% MoM, 3.42% YoY), driven by anticipated non-subsidized fuel price hikes amid narrow fiscal space and seasonal demand for airfare. The second largest contributor to monthly inflation was the food group (0.20% MoM, 4.67% YoY), especially red onions and garlic, with garlic’s price also exacerbated by currency depreciation.

 

Meanwhile, core inflation continued its upward trend, accelerating to 2.76% YoY (from 2.59% YoY in May). This occurred alongside a slowdown in gold price growth, reflecting a general increase in non[1]commodity consumer goods, which was also broadly correlated with the sharp acceleration in credit growth in May (11.51% YoY).

 

Given the government’s commitment to leveraging SAL funds to boost credit growth, we can assume that core inflation will maintain a stable or upward trend for the next six months. Despite global energy prices having fallen sharply from their wartime highs, two other factors could still push inflation higher going forward. The weakening Rupiah may further pass through to higher domestic goods prices, and the expected emergence of El Niño may push food prices higher, putting the government’s claim of ample grain supplies to the test.

 

The biggest wild card is whether the government will readjust non-subsidized fuel prices following the decline in global energy prices. We believe the narrow fiscal space and current exchange rate levels mean that the government may not be in a position to return the prices to the status quo ante bellum. We can assume, however, that the government will make good on its promise to maintain subsidized fuel prices.

 

Against this backdrop, persistent inflation risks and continued pressure on the Rupiah are likely to keep Bank Indonesia on a hawkish stance. This stance was reflected in two consecutive 25 bps policy rate hikes in Jun-26, while SRBI yields climbed to 7.7% to support the Rupiah. As such, we continue to expect a cumulative 50 bps policy rate increase from current levels during 2026.

 

Versi lengkap report ini (dan report sebelumnya) dapat diakses lewat link berikut: https://s.id/BCA_REI