The Central Bureau of Statistics (BPS) reported the headline inflation rate in October 2025 at 2.86% on an annual basis (Year on Year/YoY). Less than two months to the end of 2025, Indonesia's inflation is still below the upper limit of the government and Bank Indonesia's (BI) target of 3.5%.
On a monthly basis, BPS recorded inflation of 0.28%, while calendaryear inflation(year to date) reached 2.10%. When viewed from the monthly side, inflation this time is the highest in the last five years for the October period, after in 2021 to 2024 inflation in the same month was always below 0.20%.
BPS Deputy for Distribution and Services Statistics Pudji Ismartini explained that all expenditure components experienced inflation in October 2025, with the largest portion coming from the personal care and other services group. This group recorded inflation of 3.05% and contributed 0.21% to national inflation.
"This group is the biggest contributor to monthly inflation, and the dominant commodity is gold jewelry," Pudji said in a press conference, Monday (3/11/2025).
BPS recorded gold jewelry as the main commodity driving inflation in October 2025 with a share of 0.21%. The increase in gold jewelry prices has been going on for 26 consecutive months, with the inflation rate in October 2025 reaching 11.97%. "This is the highest inflation since 26 consecutive months of inflation," Pudji said.
When compared to previous years, gold jewelry inflation increased sharply. In October 2023, the inflation was recorded at 0.92% with a share of 0.01%, while in October 2024 it was 4.44% with a share of 0.06%.
Historically, BPS noted that every October since 2021 there has always been inflation, except in 2022 which experienced deflation of 0.11%. The inflation rate in October 2025 of 0.28% was the highest compared to the period 2021 to 2024, where inflation was recorded at 0.12%, 0.17%, and 0.08%, respectively. Different from previous years, Pudji said the main commodity contributing to inflation in October 2024 and 2025 was gold jewelry.
Gold price
Apart from gold, several other commodities also contributed to October 2025 inflation, such as red chili with a share of 0.06%, eggs 0.04%, and chicken meat 0.02%. Based on its components, the largest inflation came from the core component at 0.39% with a share of 0.25%, which was influenced by an increase in the price of gold jewelry and tuition fees for colleges or universities. The administered price component contributed 0.02%, while volatile prices contributed 0.01%.
Economic, currency and commodity observer Ibrahim Assuaibi explained that the surge in gold prices in October 2025 was triggered by limited supply in the official market. Gold stocks at Antam and Pegadaian are running low so that people turn to buying at jewelry stores at much higher prices. The condition, he said, pushed retail gold prices to touch around Rp3 million per gram, increasing pressure on prices at the consumer level.
In his estimation, almost half of people's savings in banks have moved to precious metals and gold jewelry. "Because they are considered safer and do not lose value," he said. According to him, people see gold as a long-term investment tool that is more stable than storing cash, so demand remains high despite rising prices.
In terms of the global economy, Ibrahim considers geopolitical tensions to be the main driver of the increase in world gold prices, which then has an impact on domestic inflation. He mentioned the conflict between Israel and Iran, the situation in Europe after Ukraine's attack on Russian ports, and the United States' plan to attack Venezuela as factors that drove up oil prices and increased interest in gold.
"Actually, what makes the price of precious metals fly high is the war between Israel and Iran," said Ibrahim.
In addition to global factors, the weakening rupiah exchange rate also strengthened the pressure on gold prices in the domestic market. Ibrahim explained that the strengthening of the US dollar due to the temporary closure of the federal government weakened the rupiah. Bank Indonesia's intervention in the exchange market has not been strong enough to withstand the pressure, so gold prices continue to rise.
Ibrahim added that the combination of global and domestic factors made gold jewelry play a major role in shaping inflation in 2025. People in various regions, from villages to big cities, continue to buy gold as a form of long-term investment amid economic uncertainty. "Not only precious metals, but also gold jewelry. In small towns to big cities, people still choose jewelry because it is considered safer," he said.
Not the only one
Meanwhile, researcher of the Economics Department of the Center for Strategic and International Studies (CSIS) Deni Friawan assessed that the increase in inflation was not only influenced by gold jewelry, but also by food commodities such as red chili, eggs, and chicken meat, which are classified as foodstuffs consumed daily. According to him, Indonesia's inflation is still very dependent on changes in the price of basic necessities that quickly have an impact on people's purchasing power.
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Deni added that the demand push from the Free Nutritious Meal program and the realization of government spending towards the end of the year also put pressure on prices. When spending increases while supply is not ready, prices will be pushed up. "MBG contributes to the increase in inflation because our supply cannot keep up with the increase in demand," he said. According to him, there needs to be prudence in fiscal policy so that the growth push does not cause new inflation.
Gold's contribution to inflation does exist, but Deni assesses that it is not large because the portion of gold in the calculation of inflation is relatively small. The increase in gold prices is mostly due to global factors, such as the action of central banks in various countries that buy gold as a hedge against the US dollar. "Gold prices in Indonesia rose because of two things, the world gold price increased and the rupiah depreciated against the dollar," he said.
