The Central Bureau of Statistics (BPS) released inflation data in September 2025 reaching 2.65% year on year (YoY), an increase compared to August 2025 at 2.31%. In terms of its components, inflation this time mainly came from core inflation which contributed 1.41% YoY of total inflation in September 2025. Core inflation is often seen as an indicator of people's purchasing power.
In a press conference on September 2025 inflation at the BPS Office, Jakarta, Wednesday (1/10/2025), Deputy for Production Statistics at BPS, M. Habibullah said that inflation on an annual basis occurred due to price increases as indicated by the increase in most expenditure group indices.
These were the food, beverage, and tobacco group at 5.01%; the clothing and footwear group at 0.79%; the housing, water, electricity, and household fuel group at 1.64%; the household supplies, equipment, and routine maintenance group at 0.30%;
Also from the health group by 2.01%; recreation, sports and culture group by 1.07%; education group by 1.15%; food and beverage supply/restaurant group by 1.80%; and personal care and other services group by 9.59%.
Meanwhile, expenditure groups that experienced a decrease in the index, namely: the transportation group by 0.15% and the information, communication and financial services group by 0.3%.
In terms of geographical location, the highest inflation occurred in North Sumatra at 5.32% YoY and the lowest occurred in Papua at 0.99% YoY. Meanwhile, deflation occurred in North Maluku by 0.17% YoY.
While the highest district/city inflation occurred in Deli Serdang Regency at 6.81% and the lowest occurred in Ternate City at 0.06%. Meanwhile, district/city deflation occurred in Central Halmahera Regency by 1.21%.
On a different occasion, Executive Director of the Communication Department of Bank Indonesia (BI) Ramdan Denny Prakoso said that the September 2025 inflation position is still within BI's target range for 2025, which is 1.5%-3.5%.
This maintained inflation position, Ramdan continued, is the result of the consistency of monetary policy and the close synergy of inflation control between Bank Indonesia and the Government (Central and Regional) in the Central and Regional Inflation Control Team (TPIP and TPID) through the National Food Inflation Control Movement (GNPIP) in various regions.
"Going forward, Bank Indonesia believes inflation will remain under control within the target range of 1.5%-3.5% in 2025 and 2026," he said.
In terms of its components on an annual basis, core inflation in September 2025 was recorded at 2.19% yoy, slightly higher than the previous month's realization of 2.17% yoy.
The realization of core inflation in September 2025 was mainly contributed by the gold jewelry commodity and college tuition fees. The development was influenced by the increase in global gold commodity prices as well as the seasonal factor of the start of the new academic year of academy/college education, amidst manageable inflation expectations.
In terms of volatile food, on an annual basis, this group recorded inflation of 6.44% YoY, higher than the previous month's inflation of 4.47% YoY.
Inflation in the volatile food group was contributed, among others, by various chili commodities and broiler chicken meat along with limited supply due to the end of the harvest period and increased production input costs.
"Going forward, volatile food inflation is predicted to remain under control supported by the close synergy between Bank Indonesia together with TPIP and TPID through GNPIP in various regions," Ramdan said.
On an annual basis, the administered prices group recorded inflation of 1.10% (yoy), higher than the previous month which amounted to 1.00% (yoy). Inflation in the administered prices group was mainly contributed by machine-made and hand-rolled clove cigarettes commodities along with the continued increase in retail selling prices of cigarettes.
Purchasing power improves
Contacted separately, Economic Policy Analyst of the Indonesian Employers Association (APINDO) Ajib Hamdani assessed that inflation in September came from high demand, aka demand-pull inflation.
"This is actually a positive signal, because it indicates good purchasing power and a growing economy," Ajib said on Wednesday (1/10/2025).
According to him, as long as inflation is supported by people's purchasing power, the rate of economic growth will move escalatively in a linear manner.
However, Ajib reminded that inflation caused by demand-pull inflation must be followed by the availability of adequate supply. Production and distribution should not be disrupted because it will directly harm the wider community. "There are many factors in various sectors, and each commodity needs to be dissected specifically. But the point is clear, there is a lack of production, lack of supply, and lack of supply chain," he said.
As 2025 draws to a close, Ajib expects the economic situation to be relatively stable. It has become an annual cycle that in the fourth quarter, inflation will increase in line with economic growth. According to Ajib, the end of the year is a moment of increased public spending in line with Christmas and New Year. On the other hand, the government will also disburse a lot of budget to spend the remaining budget at the end of the year.
"Whether it rains or not, inflation and economic growth will automatically be high. It affects each other. Why? Because 57% of our economic growth is supported by household consumption," he said.
Permata Bank Chief Economist Josua Pardede said the increase in September inflation was influenced by a rebound in the volatile component and a shift in the core component. He added that red chili, green chili, and purebred chicken meat were the main drivers of inflation, while gold jewelry and higher education fees provided additional impetus.
BPS data also shows that there are differences in inflation in various regions. According to Josua, the differences reflect variations in food supply, harvest calendar, and logistics.
Regarding the rice commodity that experienced deflation, Josua assessed that it occurred due to increased supply pressure. Rice prices fell at the milling, wholesale, and retail levels, in line with the increase in harvest areas and rice production throughout the year with the potential for a higher September to November harvest compared to last year.
Towards the end of the year, Josua conveyed five main factors that will affect inflation, namely high rainfall in October to November which could disrupt the supply of chili peppers, the potential for increased consumption during the Christmas-New Year holidays, the risk of disruption of fresh food distribution due to intensive rain, the slight deflation of the energy component, and the gold rally which is still a major contributor to core inflation.
For the outlook until the end of 2025, Josua expects inflation to remain within Bank Indonesia's target corridor of 1.5%-3.5%.
"I maintain my inflation forecast for the end of 2025 at around 2.3%, with the upside risk coming from loose domestic policy and potential rupiah depreciation, while the downside risk from improved food supply and possible electricity tariff discounts," he said.
