Indonesia's Inflation Control Measures that Other Countries Claim to Want to Imitate

President Prabowo Subianto highlighted that one of the achievements of his one-year administration was being able to control inflation. On several occasions the president even claimed that many other countries wanted to learn how to control inflation from Indonesia.

Prabowo said that Indonesia has techniques to monitor and control inflation that are not taught in the world's economic faculties.

"This should not be underestimated. Many countries have great growth but high inflation. We have managed to maintain stability and market confidence," the President said at the Plenary Cabinet Meeting (SKP) held at the State Palace, Jakarta, on Monday (20/10/2025).

Citing data from the Central Statistics Agency (BPS), the general inflation rate in September 2025 was 2.65% on an annual basis. This is still within the target range of Bank Indonesia (BI) and the 2025 State Budget, which is 1.5%-3.5%.

Indonesia's inflation is lower than other countries such as Turkey which reached 33.3% in the third quarter of 2025 and Argentina which amounted to 43.4% in the second quarter of 2025. Indonesia's inflation is also lower than Brazil's 5.4% and Russia's 9.8%.

On several occasions, the president also claimed that many countries want to learn inflation control from Indonesia.

"Many countries want to learn how to control inflation from us," Prabowo told a plenary cabinet meeting at the Presidential Office, Jakarta, which was broadcast online on Monday (5/5/2025).

Yesterday Monday (20/10/2025), during a regional inflation coordination meeting at the Ministry of Home Affairs office. Finance Minister Purbaya Yudhi Sadewa pointed out the importance of controlling inflation. He even said that price stability and inflation control was one of the recipes for the success of former President Soeharto to be in power for more than 32 years.

"I want to tell you a little bit why inflation is important. First, inflation can maintain political stability. So one of the secrets why Mr. Harto could last 32 years was that he could maintain stability. The price of rice is the main thing, everything else will follow rice," said Purbaya.

Inter-regional coordination

In many countries, inflation control seems to be limited to the central bank. So the way to control inflation in many countries is limited to raising or lowering the benchmark interest rate.

In fact, the benchmark interest rate is a monetary instrument of the central bank. However, the causes of inflation are not as easily resolved by the central bank's benchmark interest rate alone. There are elements of supply and demand that trigger inflation.

Unlike many countries, one of the recipes for Indonesia's successful inflation control is the close coordination between local governments, the central government, BI, and the Regional Inflation Control Team (TPID) in the National Food Inflation Control Movement (GNPIP) forum that has been running since President Joko Widodo's administration.

The way this coordination works is simple. Each region is required to report the availability of commodity and food supplies. When there is a region that lacks food supply, other regions with excess supply can supply the deficient region. This coordination is monitored by the Ministry of Home Affairs as the supervisor of regional heads throughout Indonesia.

In order for local governments to be more eager to control inflation in their regions, the central government also provides fiscal incentives to local governments that successfully control their inflation.

This strategy has also proven successful. Since 2023 until now, Indonesia's inflation has never exceeded 3%. In 2024, the inflation rate of 1.57% was within the target range of 1.5%-3.5%, while in 2023 the inflation rate of 2.61% was also within the target range of 2%-4%.

Government priorities

Ferry Irawan, Deputy for Coordination of SOE Management and Development at the Coordinating Ministry for Economic Affairs, revealed that controlling inflation is one of the government's priorities, in addition to maximizing the next 2.5 months to take advantage of the momentum to spur economic growth.

"Inflation is like the most mischievous thief, and we don't know when the price of goods is suddenly higher, and purchasing power suddenly decreases. Until the end of the year, we believe we can reach 2.5±1%, especially at the end of the year, we have several programs that will directly affect inflation, especially tariff discounts and price stabilization," Ferry explained in Jakarta, Monday (20/10/2025).

The discounted fares referred to by Ferry refer to discounts for train tickets by KAI, sea transportation by Pelni, crossings by ASDP, and several airlines to boost the tourism sector and year-end mobility.

In addition, food aid and 5 priority programs for job creation (Koperasi Desa Merah Putih, Kampung Nelayan Merah Putih, Pantura pond revitalization, fishing boat modernization, and community plantation programs) will be implemented immediately.

Chief Economist of The Indonesia Economic Intelligence (IEI) Sunarsip gave notes on the economic performance achievements. In the Growth Recovery Index developed by IEI by measuring the performance of current GDP and GDP before the pandemic, it was revealed that exports and commodities are still the support, even though strong purchasing power requires higher household consumption.

"In addition to helping the lower class, the government must also upgrade job creation permanently to help the middle class. If we want to achieve economic growth of up to 8%, labor-intensive sectors that have good absorption must be encouraged. The inflation component is stable because administered price inflation is down, but core inflation, which is influenced by purchasing power, has not been successful," Sunarsip explained.