The Office of Chief Economist (OCE) at Bank Mandiri has projected a significant rise in Indonesia’s annual inflation rate for May 2026, forecasting it to reach 3.21 percent year-on-year, up from the 2.42 percent recorded the previous month. On a monthly basis, inflation is expected to climb to 0.40 percent, marking a notable increase from April’s 0.13 percent.
In its analysis released on Monday, June 1, 2026, the Bank Mandiri OCE attributed this inflationary pressure primarily to a surge in airline ticket prices and a shift in volatile food prices from deflation to mild inflation. Specifically, volatile food costs are predicted to experience a 0.20 percent monthly inflation, a stark contrast to the 0.88 percent deflation observed in April.
The team of economists highlighted that this uptick in food costs is largely driven by specific commodities. Red chili prices lead the increase at 23 percent, followed by shallots at 4.1 percent, beef at 0.4 percent, and rice at 0.3 percent.
Conversely, core inflation is expected to show a slight decline, dipping to 0.19 percent month-on-month compared to the 0.23 percent recorded in the previous month. According to the OCE, this trend is being influenced by a reduction in gold prices alongside the ongoing depreciation of the rupiah.
Meanwhile, administered prices are forecasted to experience a monthly inflation rate of 1.3 percent, up from 0.69 percent in April. This rise is primarily fueled by a sharp spike in airline ticket prices, which are projected to jump by as much as 35.31 percent, exacerbated by the global increase in oil prices.
These forecasts precede the official inflation data release by the Central Statistics Agency (BPS), scheduled for Tuesday, June 2, 2026. Reflecting on April 2026 data, the annual inflation rate stood at 2.42 percent. At that time, expenditure groups indicated that the food, beverage, and tobacco sector was the primary driver of annual inflation, contributing 0.9 percent with an inflation rate of 3.06 percent.
The personal care and other services sector followed closely, contributing 0.77 percent with an inflation rate of 11.43 percent. During a press conference at the BPS office in Jakarta on May 4, 2026, BPS Deputy for Distribution and Services Statistics Ateng Hartono noted that inflation in this category was largely driven by gold jewelry prices.
Mutia Yuantisya contributed to the reporting of this article.
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Summary
Bank Mandiri’s Office of Chief Economist projects Indonesia’s annual inflation to rise to 3.21 percent in May 2026, up from 2.42 percent in April. This monthly increase of 0.40 percent is primarily driven by a significant surge in airline ticket prices and a shift in volatile food costs from deflation to inflation, led by rising prices for red chilies and shallots.
In contrast, core inflation is expected to see a minor decline due to lower gold prices and the depreciation of the rupiah. Meanwhile, administered prices are forecasted to increase by 1.3 percent, largely influenced by a sharp spike in airfare caused by higher global oil prices. These projections precede the official data release from the Central Statistics Agency scheduled for June 2, 2026.