Economist: Indonesian inflation may rise in the short term

On July 2, Kenanga economists said in a report that Indonesian inflation is expected to rise in the short term. They said rising food and transportation costs, coupled with continued weakness in the Indonesian rupiah, could keep price pressures high, although inflation is expected to remain within the Bank of Indonesia's target range of 1.5%-3.5%. Kenanga maintains its forecast for Indonesia's inflation in 2026 at 3.1%, up from 1.9% in 2025, but believes that if exchange rates continue to be under pressure, risks will be tilted upward. The agency added that Indonesia's central bank is expected to maintain a defensive policy stance and may raise interest rates by another 25 basis points to support the rupiah and curb inflation.