On Monday, September 1, 2025, three key Indonesian macroeconomic indicators were released, all of which continued to demonstrate a positive trend. August 2025 inflation remained under control, the Manufacturing Purchasing Managers’ Index (PMI) returned to expansion territory, and the trade balance posted another surplus in July 2025, marking 63 consecutive months of surplus.

Indonesia’s inflation remains within the target range of 2.5±1%. The Consumer Price Index (CPI) recorded a deflation of 0.08% month-on-month (mtm) in August 2025, with annual inflation standing at 2.31% year-on-year (yoy) and 1.60% year-to-date (ytd). This achievement was supported by core inflation, which rose by 0.06% (mtm) and 2.17% (yoy), indicating that household purchasing power remains intact despite ongoing global uncertainties.

Volatile food (VF) inflation experienced a deflation of 0.61% (mtm), while annual VF inflation stood at 4.47% (yoy), in line with the Central Inflation Control Team (TPIP) High-Level Meeting (HLM) agreement to maintain VF inflation within the 3–5% (yoy) range.

August’s monthly deflation was largely driven by declining prices of several food commodities, including tomatoes and bird’s eye chilies, due to an abundant supply resulting from peak harvest season. Administered Prices (AP) also recorded a deflation of 0.08% (mtm), or 1.00% (yoy), mainly due to a decrease in fuel prices following adjustments to non-subsidized fuel in early August. Furthermore, lower airfare prices—offered by several airlines in celebration of Indonesia’s 80th Independence Day—also contributed to easing AP inflation. These policies have proven effective in maintaining consumer purchasing power and boosting public mobility.

The government, through the TPIP, remains committed to maintaining price stability and supply availability, especially for rice. The government will continue to distribute rice under the SPHP (Stabilization of Food Supply and Prices) program, targeting 1.3 million tons by the end of the year.

“To boost agricultural productivity, access to financing through Agricultural KUR (People’s Business Credit) and Agricultural Machinery Loans will be optimized. As of August, Rp60.93 trillion has been disbursed out of a total allocation of Rp287.47 trillion. The government is also committed to maintaining purchasing power by continuing to offer economic stimulus such as transportation discounts, which will resume during the upcoming Christmas and New Year holiday season,” said Coordinating Minister for Economic Affairs Airlangga Hartarto.

Indonesia’s trade balance recorded another surplus in July 2025, reaching USD 4.17 billion—an increase of 1.71% (mtm) from the previous month. This sustained surplus reinforces the strong outlook for the national economy. The surplus was supported by improved export performance, which rose by 5.6% (mtm) to USD 24.75 billion, outpacing imports at USD 20.57 billion in July.

In response to concerns regarding new U.S. trade tariffs, Indonesia’s trade balance with the United States posted a surplus of USD 2.2 billion in the non-oil and gas sector in July 2025. This was supported by stable export performance, as Indonesia remained subject to the baseline tariff rate of 10% on exports to the U.S. during that month.

The manufacturing activity of Indonesia’s major trading partners also showed improvement, supporting demand for Indonesian products. India’s manufacturing PMI rose from 58.4 to 59.1, ASEAN’s PMI increased from 48.6 to 50.1, and the European Union’s PMI climbed from 49.2 to 49.6 in July. Most of Indonesia’s top non-oil and gas export destinations recorded increases, with China remaining the top destination, followed by the United States and India.

The increase in export performance was further supported by rising global prices of Indonesia’s key commodities, including coal, natural gas, palm oil, rubber, iron ore, and tin. In addition to commodities, exports of higher-value manufactured goods also saw growth, such as vehicles and their parts (HS 87), machinery and mechanical appliances (HS 84), and footwear (HS 64).

Imports in July 2025 reached USD 20.57 billion, an increase of 6.43% (mtm), with growth across all categories of goods. Notably, imports of raw materials and intermediate goods rose by 6.16% (mtm), and capital goods by 4.64% (mtm), signaling continued economic momentum as businesses utilize imports for domestic consumption and re-export. The largest non-oil and gas imports came from China, followed by Japan and Singapore.

Looking ahead, the trade balance is expected to remain in surplus, supported by the positive outlook reflected in the Manufacturing PMI expansion. In August 2025, Indonesia’s Manufacturing PMI rose significantly from 49.2 in July to 51.5, returning to expansion territory after four months of contraction. This improvement was driven by rising domestic and export demand. Output and new orders increased for the first time in five months, export orders rose at the fastest pace since September 2023, and employment and purchasing activity also grew. This presents a positive signal for the future development of Indonesia’s manufacturing sector.

“The return of the Manufacturing PMI to the expansion zone reflects the continuous improvement in domestic economic conditions and growing business optimism, supported by recovering purchasing power and rising production growth in the coming period,” said Coordinating Minister Airlangga.

The government will continue to maintain this growth momentum through several key policies, including the implementation of Labor-Intensive Industrial Credit and boosting domestic product demand through the National Online Shopping Day (Harbolnas) program.

Source: ekon.go.id