Deeper Deflation in May 2025, Food Prices as the Main Trigger.

JAKARTA — Statistics Indonesia (BPS) recorded that the Consumer Price Index (CPI) experienced a deflation of 0.37% in May 2025 on a month-to-month basis. The CPI dropped from 108.47 in April to 108.07 in May.

Although monthly deflation occurred, the year-on-year inflation rate remained at 1.60%. Meanwhile, inflation from the beginning of the year to May 2025 (year to date) reached 1.19%.

"The deflation in May 2025 was deeper compared to May 2024," said Pudji Ismartini, Deputy of Distribution and Services Statistics at BPS, during a press conference on Monday (2/6), as quoted from kontan.co.id.

The food, beverages, and tobacco group was the main contributor to deflation in May 2025, with a price decline of 1.40% and a contribution to national deflation of 0.41%. Key commodities included red chili and bird’s eye chili, each contributing 0.12%, followed by shallots (0.09%), fresh fish (0.05%), garlic (0.04%), and broiler chicken meat (0.01%).

However, some goods and services still experienced price increases and contributed to inflation, such as tomatoes (0.03%), mobile phone credit tariffs (0.02%), and air transport fares (0.01%).

Deflation in May 2025 was primarily driven by a decline in volatile price components, which recorded a deflation of 2.48% and contributed 0.41%, triggered by falling prices of red chili, bird’s eye chili, and garlic. Prices regulated by the government also experienced deflation, while the core inflation component still showed an increase due to rising prices of mobile phone credit, gold jewelry, and ground coffee.

Regionally, out of 38 provinces in Indonesia, 31 experienced deflation, while 7 recorded inflation. The deepest deflation occurred in Gorontalo at 1.68%, while the highest inflation was recorded in the Papua Pegunungan province at 0.91%.

Deflation Still Possible in June

David E. Sumual, economist at PT Bank Central Asia Tbk. (BCA), assessed that the deflation in May 2025 was caused by falling food prices, such as shallots and red chili, as well as a drop in Pertamax fuel prices.

David also explained that the core component tends to remain stable, except for gold prices. “The core component can reflect the public’s purchasing power,” he said, as quoted by bisnis.com on Tuesday (3/6).

Nevertheless, in May, the core component still recorded an inflation of 0.08%, primarily driven by persistently high gold prices. Looking ahead, David forecasts that the deflation trend may continue. "Inflation in June is likely to remain low and is even projected to continue deflating following the government’s stimulus policy offering discounts on toll roads, trains, airplanes, ships, and others," he added. (KEN)