Soaring Food Costs Push Inflation to 3.28% as Ministry Reaffirms Target Range

JAKARTA, Investortrust.id — Consumer price inflation accelerated across Southeast Asia’s largest economy in September 2026, driven by rising costs for core kitchen staples while fiscal authorities reaffirmed that overall macroeconomic conditions remain anchored within the sovereign target envelope.

Data released by Statistics Indonesia (BPS) on Thursday, Oct. 1, 2026, showed the Consumer Price Index (CPI) advancing 0.30% month-on-month, lifting annual headline inflation to 3.28% with an index level of 112.31. The reading rose from 111.97 in August, bringing cumulative inflation for the calendar year to 2.17%.

Food expenditures form the foundation of household living costs in developing economies, where fast-rising grocery bills directly threaten disposable household incomes and shift broader consumer sentiment. Accelerating headline inflation toward the upper boundary of the central bank's target band narrows monetary maneuverability for Bank Indonesia, leaving policymakers to manage imported food costs and currency stability without stifling private consumption.

Addressing journalists during a media briefing in Bogor, West Java, on Thursday, Oct. 1, 2026, Deputy Finance Minister Juda Agung emphasized that price dynamics remain under control and consistent with macroeconomic stability targets.

"Actually, this 3.28% figure is still within the range, which is 2.5% plus or minus 1%," Juda said on Thursday.

Food Basket Leads Monthly Price Pressures

BPS Deputy for Distribution and Services Statistics Ateng Hartono detailed during a press conference in Jakarta on Thursday that the food, beverage, and tobacco expenditure group was the primary driver of monthly inflation, climbing 0.88% month-on-month and contributing 0.26 percentage points to the aggregate print.

"The commodities predominantly driving inflation include bird’s eye chili, red chili, broiler chicken meat, rice, and broiler chicken eggs," Ateng explained. Bird’s eye chili contributed 0.08 percentage points, red chili contributed 0.06 percentage points, and broiler chicken added 0.05 percentage points to the monthly headline figure.

On an annual comparison, the food, beverage, and tobacco basket jumped 4.37% year-on-year, generating an impact of 1.28 percentage points. Transportation expenditures also expanded 4.84% over the past twelve months, contributing 0.58 percentage points, while personal care and other services gained 7.77% on the back of rising gold and jewelry prices.

"Commodities with the largest contribution to inflation in the food, beverage, and tobacco group were primarily fresh fish, broiler chicken meat, bird’s eye chili, rice, cooking oil, sweetened condensed milk, and beef," Ateng added.

Target Corridor Holds as Core Measures Moderate

Geographically, regional price dispersion remained pronounced across the archipelago, with North Sulawesi recording the highest annual inflation rate at 7.59% and South Sumatra logging the lowest at 2.55%.

Underlying structural inflation remained relatively steady, with annual core inflation—which strips out volatile food items and government-set energy tariffs—registering at 2.84% year-on-year and 0.10% month-on-month. In the agricultural sector, the national Farmer Terms of Trade (NTP) climbed 1.49% sequentially to 131.11, reflecting higher farmgate realizations relative to rural consumption costs.

Juda noted that the prevailing headline inflation rate has not yet eroded domestic consumer demand or disrupted long-term household investment decisions, while dismissing concerns that price trends will degrade the rollout of key government social initiatives like the Free Nutritious Meal (MBG) program.

"This inflation is crucial to safeguard, especially food inflation, as it impacts the public directly," Juda stated, adding that the finance ministry and Bank Indonesia will maintain joint interventions to manage domestic supply chains and stabilize the exchange rate heading into 2027.