Divya Karyza, Jakarta Indonesia's inflation edged up in June as food prices rose amid Idul Adha festivities and the start of school holidays, both of which boosted household consumption.

Statistics Indonesia (BPS) reported on Tuesday that the consumer price index (CPI) rose by 0.19 percent month-to-month (mtm) in June, following a 0.37 percent monthly deflation in May. This pushed the year-to-date inflation to 1.38 percent.

Food, beverages and tobacco were the main drivers of June inflation, contributing 0.13 percentage points to the monthly figure. This was primarily due to higher prices for rice, which added 0.04 percentage points, along with bird's eye chili, shallots and tomatoes.

As a result, volatile food prices rose 0.77 percent mtm, after a sharp 2.48 percent deflation in May.

Transportation costs contributed an additional 0.01 percentage points to June inflation, driven by a 5.81 percent jump in airfares. However, this was partly offset by lower prices for sea and train travel, which fell by 16.96 percent and 4.2 percent, respectively, due to holiday discounts.

On May 23, Coordinating Economic Minister Airlangga Hartarto unveiled a new stimulus package aimed at supporting consumer spending in the second quarter and boosting gross domestic product (GDP) growth to 5 percent following a disappointing first quarter.

The initiative, effective in June and July, includes discounts on train, airplane and ferry tickets, as well as toll road discounts for around 110 million eligible drivers.

Nevertheless, administered prices still rose by 0.09 percent mtm, following a 0.02 percent decline in the previous month. The increase was driven by rising costs of household fuel, airfares and machine-rolled clove cigarettes.

Core inflation, which excludes volatile and administered prices, increased by 0.07 percent in June, nearly unchanged from the 0.08 percent rise recorded in May.

On an annual basis, headline inflation climbed to 1.87 percent, up from 1.6 percent in May, though still below the 2.51 percent recorded in June last year.

The personal care and other services category saw the highest annual increase at 9.3 percent, largely driven by rising gold jewelry prices, which have posted steady monthly gains since late 2023.

While global gold prices and firm domestic demand may continue to exert inflationary pressure, the overall rate remains within Bank Indonesia's target range of 1.5 to 3.5 percent.

A stable rupiah following the Israel-Iran truce has created room for supportive policy, according to Bank Danamon economist Hosianna Evalita Situmorang.

The upcoming July stimulus will play a crucial role in sustaining household spending as economic momentum softens in the second half of the year, she said in a statement on Tuesday.

Aside from gold jewelry, volatile food prices and airfares have consistently emerged as key inflationary pressures throughout the first half of 2025.

In a separate report also released by BPS on Tuesday, foreign tourist arrivals to Indonesia rose by 14 percent year-on-year in May to 1.31 million people. Visitors from Malaysia, Australia and Singapore dominated the monthly tally.

In total, 5.63 million tourists entered the country in the first five months of the year, a 7.44 percent increase compared with the same period in 2024.

Source: https://asianews.network/indonesias-june-inflation-ticks-up-as-food-prices-climb