KEY HIGHLIGHTS
- July CPI cooled to 2.88% year-on-year, below the 3.20% consensus, with a surprise 0.14% monthly deflation. The drop was driven entirely by volatile food (-1.68%), as shallots, chili, eggs and tomatoes corrected on supply; core stayed positive and sticky at 2.76%, so this is a benign, supply-led disinflation, not a demand signal. July deflation is not seasonal · July 2025 was +0.30%.
- June’s trade balance was a USD0.45 billion deficit, the second straight, though narrower than May’s USD1.61 billion and the USD0.78 billion consensus. Exports (+8.84%) and imports (+34.27%) both beat sharply, but the month-on-month improvement came 77% from a nonmigas recovery, not energy.
- The energy deficit is structural, not a price story: oil fell about 17.7% month-on-month in June, yet migas imports stayed flat at USD4.56 billion, implying volume rose about 20% to offset the cheaper barrel. Crude exports have collapsed and oil-product imports nearly doubled; a cheaper barrel just financed more of it.
- For Bank Indonesia after Warjiyo’s exit, cooler inflation opens theoretical easing room, but a structural energy deficit and a rupiah past IDR18,000 argue against it · and neither is rate-sensitive. Key watch: second-quarter GDP on 5 August (consensus 5.10% vs 5.61% in Q1).
Regards, Aldiracita Research
