Indonesia's August CPI inflation at 3.19%, nearing the 3.5% ceiling of BI's target

Published 28 Sep 2026Data as of 1 Sep 2026IndonesiaMacro & households

August CPI rose 3.19% year on year, 0.21% month on month and 1.86% year to date (BPS, 1 September).
Core inflation was 2.92%; North Maluku posted the highest provincial rate at 5.28%.
Inflation is inside BI's 2.5% ± 1% target but close to the ceiling, limiting room for rate cuts.

Facts

Headline: the consumer price index (index level 111.97) rose 3.19% year on year in August 2026, 0.21% month on month and 1.86% year to date. Basis: August 2026. Source: Statistics Indonesia (BPS) press release, 1 September 2026. ¹

Core: core inflation was 2.92% year on year, 0.21% month on month and 1.97% year to date. Same source.

Regional dispersion: by province, year-on-year inflation was highest in North Maluku at 5.28% and lowest in North Kalimantan at 2.17%. Same source.

Target: Bank Indonesia's (BI) inflation target for 2026–2027 is 2.5% ± 1% (ceiling 3.5%). Source: ANTARA report on the BI board meeting of 23 September. ²

Analysis

Regionally, Indonesia's 3.19% sits between Malaysia (January–July average 1.8%, BNM) and the Philippines (August 6.1%, PSA). The gap between headline and core (0.27 pp) suggests the recent overshoot comes mainly from volatile items such as food, although item-level contributions were not checked against primary data here. With only 0.31 pp of headroom to the target ceiling, BI kept its policy rate at 5.75% in September.

Implications

ExecutivesFor products serving low-income customers, it is time to update living-cost assumptions in underwriting to current prices.

InvestorsWith little room for BI to cut, a fall in non-banks' funding costs is unlikely for now.

OperatorsGiven wide regional dispersion, monitor arrears by province rather than against the national average.

Counterpoints and uncertainties

Inflation of 3.19% is within the target band and not at a level that can be said to seriously erode household repayment capacity. Whether a single month's overshoot persists requires data from September onward. A secondary report cites a July year-on-year figure that we have not verified against BPS primary data.

Figures: see definitions

Headline CPI inflation (BPS): 3.19%. Year-on-year change in the consumer price index. Indonesia, national. Basis date: 31 Aug 2026. Source: BPS: Inflasi year-on-year (y-on-y) pada Agustus 2026 sebesar 3,19 persen
BI inflation target, 2026–2027: 2.5% ± 1%. Bank Indonesia CPI inflation target band. Indonesia, national. Basis date: 23 Sep 2026. Source: ANTARA: BI-Rate kembali bertahan di level 5,75 persen pada RDG September

Sources

Reports are for information only and are not investment advice. Methodology: sources, verification and definitions