Indonesia Macro Update - Inflation 02 April 2026
KBVS MACRO UPDATE
Thursday, 2 April 2026
Manageable March CPI Anchored by Gold and Transport Deflation
Indonesia’s headline inflation came in at 0.41% MoM or 3.48% YoY in Mar ‘26. Core inflation recorded 0.13% MoM or 2.52% YoY. Food prices rose by 1.07% MoM, with volatile food inflation at 1.58% MoM. Administered prices increased by 0.31% MoM, mainly driven by higher non-subsidized fuel prices and seasonal transport fares.
Against this relatively manageable inflation backdrop, attention shifts to external and policy risks. On the fiscal side, recent efficiency measures generating IDR74.2 tn in savings provide some support. However, these remain relatively small compared to the wider fiscal deficit and weak tax collection, implying limited fiscal space to cushion future inflation shocks.
Domestic risks also remain, particularly from a potential El Niño episode from Apr-Sep ‘26, which could disrupt food supply and push up prices. At the same time, Rupiah depreciation poses a risk of imported inflation, although this is partly offset by Indonesia’s strong external position, including a USD1.28 bn trade surplus in Feb ‘26 and expectations of improving coal exports.
With inflation risks tilted to the upside, real rates remain positive, supporting bond real yields and their relative attractiveness. This helps anchor portfolio inflows into Indonesian government bonds, providing support to the Rupiah. In this environment, Bank Indonesia is likely to maintain its benchmark rate to preserve stability amid persistent global yield pressures.
Regards,
Fikri C. Permana & Khairunnisa Nadhifah S – KBVS Research Team