Indonesia December Inflation Cools, Stays Within Bank Indonesia Target

1 min readUpdated May 28, 2025Jan 2, 201910:04 AM

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Indonesia’s December annual inflation rate eased, but the pace was quicker than expected, data from the Central Statistics Agency, or BPS, showed on Wednesday. The annual inflation rate in December was 3.13 percent, the agency said, lower than November’s 3.23 percent, but quicker than the median forecast of 2.98 percent. The December rate was well within Bank Indonesia’s target range of 2.5 percent to 4.5 percent for 2018.

On a monthly basis, the consumer price index rose 0.62 percent due to rising food prices and transportation fares.

The annual core inflation rate, which excludes government-controlled and volatile prices, was 3.07 percent, matching the poll’s prediction and representing a slight acceleration from November’s 3.03 percent.

The central bank raised interest rates six times last year to defend the rupiah, which hit its lowest in 20 years in October. However, the currency pared some losses closer to the end of the year due to capital inflows

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What this means

The slight cooling of Indonesia's inflation rate offers a mixed signal for retailers. While remaining within Bank Indonesia's target suggests stability, the faster-than-expected pace and rising food/transportation costs still pressure household budgets. This context is critical for retail expansion, unlike Panpuri's ambitious 16-store Asian rollout or Miniso's targeted concept store in Indonesia, both of which rely on consumer spending confidence. With core inflation slightly accelerating, retailers face continued cost management challenges. The central bank’s past aggressive rate hikes to defend the rupiah highlight financial volatility. Retailers must closely monitor Bank Indonesia's next interest rate announcement for indications of future consumer spending power.

Rajiv Menon · Retail News Asia newsroom

Questions & Answers

What was the annual inflation rate in Indonesia for December?

Indonesia's annual inflation rate in December was 3.13 percent. This was lower than November's rate but still quicker than the median forecast for the month.

Did the December inflation rate meet Bank Indonesia's target?

Yes, the December annual inflation rate of 3.13 percent was well within Bank Indonesia’s target range. The central bank had set a target of 2.5 percent to 4.5 percent for 2018.

What caused the consumer price index to rise on a monthly basis?

On a monthly basis, the consumer price index rose by 0.62 percent. This increase was primarily attributed to rising food prices and an increase in transportation fares.

Why did Bank Indonesia raise interest rates last year?

The central bank increased interest rates six times last year. This action was taken to defend the rupiah, which had reached its lowest value in 20 years during October.

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