Jakarta, Indonesia Sentinel — Indonesia recorded a 0.76% deflation rate in January 2025 compared to the previous month, marking the first monthly deflation since September 2024, according to data from Statistics Indonesia (BPS).
Acting Head of Statistics Indonesia (BPS), Amalia Adininggar Widyasanti, announced at a press conference on Monday, February 3, that Indonesia experienced a 0.76% month-to-month deflation in January 2025. The Consumer Price Index (CPI) dropped from 106.80 in December 2024 to 105.99 in January 2025.
One of the main drivers of January’s deflation was the government’s electricity tariff discount, introduced as a compensation measure for the increase in Indonesia’s Value-Added Tax (VAT) to 12% under the Prabowo-Gibran administration.
“This deflation was driven by a 50% discount for customers with electricity usage of up to 2,200 VA in January 2025,” Amalia states, as reported by Bisnis. The electricity tariff discount led to a 32.03% drop in electricity costs, contributing 1.47% to the overall CPI decline.
She emphasized that the inclusion of the discount in inflation calculations aligns with the Consumer Price Index (CPI) Manual used by statistical agencies worldwide, ensuring an accurate reflection of its impact on national inflation.
“The discount is factored into inflation calculations as long as the quality of the goods or services remains unchanged under normal conditions,” she explained.
Deflation
The housing, water, electricity, and household fuel sector saw the most significant monthly deflation, dropping by 9.16% and contributing 1.44% to the overall deflation. Electricity tariffs played the biggest role in this category, accounting for a 1.47% deflationary impact.
Amalia also noted that deflation was recorded in 34 out of Indonesia’s 38 provinces, with West Papua experiencing the steepest decline at 2.29%. Meanwhile, four provinces saw inflation, with the highest increase recorded in the Riau Islands at 0.43%.
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Indonesia deflation in January 2025 underscores the significant impact of government policies on consumer prices, particularly in the energy sector. As Indonesia navigates its economic landscape in 2025, future inflation trends will depend on the government policies.
(Raidi/Agung)
