May inflation rose to 3.1% year-on-year, nearing Bank Indonesia’s upper target band, while April’s trade surplus shrank to $89m.
Indonesia’s annual inflation climbed to 3.1% in May from 2.4% in April, driven by higher food and energy costs despite stable fuel prices. Volatile items like cooking oil and chillies surged 6.2% year-on-year, up from 3.4% in April, while administered and energy prices also rose.
The inflation rate remains within Bank Indonesia’s 1.5-3.5% target range but is approaching its upper limit. Concurrently, April’s trade surplus narrowed sharply to $89m, the smallest in nearly six years, as crude oil and refined fuel imports jumped 67.5% and 88%, respectively.
Analysts warn that without fuel price adjustments, rising global costs and a weakening rupiah could further strain the trade balance and current account. Bank Indonesia is expected to continue tightening monetary policy this year to mitigate risks.