Economists: Subsidy policy is key to influencing Indonesia's inflation outlook.

Wong Xian Yong, an economist at Industrial Bank, stated in a report that the impact of soaring oil prices on Indonesia's overall consumer price index depends crucially on the government's subsidy policy. He said that because there are currently no plans to immediately raise fuel price subsidies, Indonesia's inflation is expected to remain within a manageable range, but with a bias towards upward risks. He said that the inflation rate is expected to be 2.5% in 2026, but if global energy prices remain high, food supply is impacted by El Nio risks, or the Indonesian rupiah remains weak, inflation rates could rise. He added that rising fertilizer costs and weather risks could push up food prices later in 2026. Industrial Bank expects that the Bank of Indonesia will maintain its interest rates in April, as currency weakness and external volatility limit the room for easing.