Indonesia’s Consumer Price Index (CPI) rose on an annual basis, bringing inflation to 2.65% YoY in September 2025, up from 2.31% YoY in August 2025, marking the highest inflation rate since May 2024. Core inflation increased slightly to 2.19% YoY in September 2025 from 2.17% YoY in August 2025. Commodities contributing to the core inflation component included gold jewelry, cooking oil, and instant coffee. Meanwhile, the volatile food component recorded the highest inflation, at 6.44% YoY in September 2025, mainly driven by rising prices of red chili peppers, shallots, rice, and broiler chicken meat. The administered price component experienced 1.10% YoY inflation, with major contributions from PAM water tariffs, machine-made kretek cigarettes (SKM), and household fuels.

Indonesia’s Trade Balance Surplus (NPI) increased to US$5.49 billion in August 2025 from US$4.17 billion in July 2025. This improvement was driven by a higher non-oil and gas surplus, which rose to US$7.15 billion in August 2025 from US$5.75 billion in July 2025, supported mainly by animal and vegetable fats, mineral fuels, and iron and steel commodities. Meanwhile, the oil and gas trade balance recorded a wider deficit of US$1.66 billion in August 2025, compared to US$1.58 billion in July 2025, primarily due to higher deficits in crude oil and oil products. The trade balance has maintained a surplus for 64 consecutive months since May 2020. The United States contributed the largest surplus of US$12.20 billion, while the largest deficit came from China, amounting to US$13.09 billion during January to August 2025.

The Bank Indonesia Board of Governors Meeting (RDG BI) cut interest rates to 5.25% with a Deposit Facility Rate of 4.50% and Lending Facility Rate of 6.00% on July 16, 2025. This decision aligns with the expected inflation rate to fall below the target of 2.5±1% in 2026 and 2027. Additionally, BI assesses that the current Rupiah exchange rate is relatively stable compared to the currencies of Indonesia's developing trade partners and advanced economies, excluding the US, thus supporting Indonesia's export competitiveness. The stable exchange rate is supported by continued foreign capital inflows, particularly into government securities (SBN), and foreign currency conversion to Rupiah following the Natural Resources Export Proceeds (DHE-SDA) policy.

Consumer confidence rose slightly in May 2025, reaching 117.8, primarily due to improved current economic conditions, despite growing concerns about job availability. This period also saw increased consumer spending, particularly on consumption, leading to a decline in savings for lower-middle-income groups. Retail sales, after a dip in May, are projected to rebound in June, driven by the automotive and apparel sectors, as well as the alignment with upcoming holidays and promotions.

Last night (7/7), U.S. President Donald Trump sent a letter to ASEAN leaders announcing the continuation of reciprocal import tariff policies, which will take effect on August 1, 2025. It is expected to cause corrections in ASEAN financial markets, including stock and bond markets. It is also anticipated that ASEAN Central Banks, especially Bank Indonesia, will likely maintain a wait-and-see approach regarding interest rate cuts due to concerns about inflation. Indonesia faces a 32% tariff on all exported products, unchanged from the initial rate before the 90-day tariff policy delay was implemented. Other countries face different rates, such as Malaysia, which has a rate of 25%, up from 24%, although still lower than other ASEAN nations like Laos and Myanmar, both at 40%. It is followed by the top 6 ASEAN countries, Thailand and Cambodia, both at 36%.

Indonesia's foreign exchange reserves increased to US$152.6 billion in June 2025 from US$152.5 billion in May 2025. It was attributed to factors including increased tax and service revenues, as well as government global bond issuance amid Rupiah exchange rate stabilization policies in response to global economic uncertainties. The foreign exchange reserves position at the end of June 2025 was equivalent to 6.4 months of imports or 6.2 months of imports and government external debt payments, well above the international adequacy standard of approximately 3 months of imports.

Indonesia's Consumer Price Index (CPI) experienced inflation of 1.87% YoY in June 2025, up from 1.60% YoY in May 2025. This inflation realization was above the consensus forecast of 1.83% YoY. Core inflation slightly decreased to 2.37% YoY in June 2025 from 2.40% YoY in May 2025. Commodities contributing to core inflation components included jewelry, ground coffee, and cooking oil. Meanwhile, the volatile food component experienced inflation of 0.57% YoY in June 2025, primarily supported by increases in rice, coconut, and tomato prices in May 2025. The administered price component experienced inflation of 1.34% YoY, with significant contributions from water utility rates, Machine-Made Kretek Cigarettes and Hand-Rolled Kretek Cigarettes (Figure 1).

Indonesia's Trade Balance Surplus (NPI) increased to US$4.30 billion in May 2025 from US$0.16 billion (Figure 1). This increase was driven by a significant rise in non-oil and gas surplus to US$5.83 billion in May 2025 from US$1.51 billion in April 2025. The growth was contributed by animal and vegetable fats and oils, mineral and vegetable fuels, as well as iron and steel. Meanwhile, the oil and gas trade balance recorded a deficit of US$1.53 billion in May 2025, primarily due to the decline in crude oil and petroleum products. The NPI surplus has maintained its position for 61 months since May 2020.

U.S. economic growth contracted by 0.5% QoQ final in 1Q25 from 2.40% QoQ in 4Q24, as released by the US Bureau of Economic Analysis, and below market expectations of 0.2% QoQ expansion. It aligns with the slowdown in general inflation indicators, namely Personal Consumption Expenditure (PCE) to 2.30% YoY in March 2025 from 2.70% YoY in February 2025. Meanwhile, the unemployment rate in March rose to 4.2% from 4.1% in February 2025.U.S. Growth Domestic Product (GDP) has growth driven by personal consumption expenditure contribution, which grew only by 0.5% QoQ or 69.3% of total GDP. Based on value, personal consumption increased by 0.11% QoQ to US$18.6 trillion, supported by increased household service spending. Other expenditures, such as domestic investment, grew highest at 23.8% QoQ. In comparison, government spending slowed by 0.6% QoQ due to U.S. President Donald Trump's policy of maintaining efficient government operations overseen by the Department of Government Efficiency (DOGE). In terms of net exports, the highest slowdown contracted by 29.07% QoQ due to rising import values as goods and services were not produced in the US (Figure 2).