Indonesia Sees 0.37% Deflation in May 2025, Says BPS

TEMPO.CO, Jakarta — The Central Statistics Agency (BPS) announced that Indonesia's economy experienced a 0.37 percent monthly deflation (mtm) in May 2025. This was conveyed by Pudji Ismartini, the BPS Deputy Statistician for Distribution and Services, at a press conference in Jakarta on Monday, June 2, 2025.

BPS recorded a decline in the Consumer Price Index (CPI) from 108.47 in April 2025 to 108.07 in May 2025. "The annual inflation rate was recorded at 1.6 percent, and the calendar year inflation rate was recorded at 1.19 percent (ytd)," as quoted from Antara.

Before this, the Center of Economic and Law Studies (Celios) predicted that the CPI would experience a 0.5 percent deflation month-to-month in May 2025. "Deflation is not only a result of post-Eid factors, but also the continuation of pressure on the demand side," said Celios Executive Director Bhima Yudhistira on Monday, June 2, 2025.

This prediction was made before the BPS announced this month's CPI. Bhima noted that inflation for food, beverages, and tobacco products remained low. Furthermore, he stated that transportation inflation also slowed down. "So, demand-pull inflation has not been apparent," he said.

Bhima stated that middle- to upper-class groups are still refraining from spending, and that the lower-middle class is hindered by its low income.

He also highlighted the limited job opportunities and the surge in layoffs, which is estimated to reach 280,000 people by the end of this period. Bhima mentioned that this adds to the pressure on household consumption in aggregate.

According to Bhima, the government should view low inflation as an early warning caused by the private sector and households' reluctance to spend. As a solution, Bhima suggested that the government not skimp on spending.

Josua Pardede, the chief economist at Bank Permata, also predicted deflation. According to his calculation, the CPI in May 2025 will record a monthly deflation of -0.27 percent (mom).

"In May 2025, it is estimated that there will be monthly deflation, with an estimated rate of -0.27 percent mom, after recording high inflation of 1.17 percent mom in April due to seasonal spikes during the Eid period," said Josua.

This price decline is mainly driven by the normalization of food prices post-Idulfitri, including the decline in prices of volatile commodities such as red chilies and bird's eye chilies. Inflation is expected to continue for main food commodities such as rice and poultry products, but on a moderate scale.

Meanwhile, outside of the volatile food group, Josua estimated that government-regulated prices also experienced deflation, albeit not as deep as the food group. This is due to the decline in non-subsidized fuel prices due to the weakening of global oil prices in April, as well as a reduction in air transport fares following the end of the demand surge during Eid.

Alfitria Nefi contributed to the writing of this article

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