BI Wary of Persistently High Food Inflation

Bank Indonesia (BI) has identified rising food inflation as the main challenge to maintaining price stability in the face of global economic uncertainty. The central bank, in collaboration with the government, plans to bolster food inflation control measures through the Synergistic Food Inflation Control Movement (GPIPS).

Destry Damayanti, the Acting Governor of Bank Indonesia, noted that while core and general inflation remain relatively stable at 3.5 percent, food inflation has surpassed 5 percent, demanding special attention. She attributed this surge primarily to supply-side issues, including limited availability of key commodities.

"Food availability is relatively limited. This is what will be addressed. We are grateful to have Inflation Control Teams, both at the central and regional levels," Damayanti stated during an online briefing. BI, along with government officials, will report on inflation control progress and future steps to the President on August 5.

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We see challenges ahead for inflation. Especially food inflation. For core inflation, it is relatively safe with a total inflation of 3.5 percent. Meanwhile, food inflation is above 5 percent. That is our concern.

To counter global economic headwinds, particularly the sustained high interest rates in the United States, BI has decided to maintain its benchmark interest rate at 5.75 percent. This decision aims to safeguard the stability of the Indonesian rupiah. Damayanti emphasized that BI will continue to utilize its monetary instruments to ensure rupiah stability while simultaneously promoting economic growth through macroprudential policies, payment system enhancements, support for SMEs, Islamic economics, and green economics.

BI also confirmed that its policy direction remains consistent despite leadership changes following the resignation of Governor Ferry Warjiyo. The GPIPS program, an evolution of the National Food Inflation Control Movement (GNPIP), integrates productivity improvements, downstream processing, availability, and distribution of food to stabilize prices and strengthen national food security. As of July 2026, GPIPS implementation has exceeded several national targets, including optimizing Good Agricultural Practices and inter-regional cooperation.

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Food availability is relatively limited. This is what will be addressed. We are grateful to have Inflation Control Teams, both at the central and regional levels.