- Indonesia’s CPI inflation edged lower to 1.60% YoY in May 2025, driven by falling food prices, while core inflation remained muted.
- Lower food prices have created a more conducive environment for a consumption recovery, a trend the government aims to reinforce through another round of stimulus packages in June–July 2025.
- The still-elevated real interest rate, due to muted inflation, may continue to dampen loan demand, potentially encouraging Bank Indonesia to maintain its dovish bias, especially if external conditions remain favourable.
