- Indonesia’s inflation rose by 0.22% MoM in Oct-26, primarily driven by higher food prices amid El Niño-related volatility, particularly in red chilies, bird’s eye chilies, and tomatoes.
- On an annual basis, inflation eased slightly to 3.23% YoY from 3.28% in the previous month, as softer core inflation helped offset persistent food price pressures.
- The expected persistence of El Niño into early 2027, continued Rupiah depreciation, and elevated global energy prices are likely to sustain inflationary pressures in the next few months.
- Policy trade-offs are becoming more pronounced. Fiscal stimulus and fuel price stability, amid limited fiscal ammunition, may help keep inflationary pressures moderate. Meanwhile, continued Rupiah depreciation could prompt BI to adopt a tighter monetary stance.
