A number of economists are forecasting that the Consumer Price Index (CPI) for May 2025 will once again show a monthly decline, or deflation on a month-to-month (mtm) basis.

This projection marks a reversal from April 2025, when inflation reached 1.17 percent due to seasonal price increases during the Eid (Lebaran) holiday.

Bank Mandiri Chief Economist, Andry Asmoro, estimates that the CPI for May will show a deflation of 0.18 percent month-to-month. This decline is largely driven by an abundant post-harvest food supply, especially chili. Prices of volatile food items have also started to normalize.

"The deflationary pressure indicates continued stability in food supply and a return to normal demand levels after Eid," Andry stated on Monday (June 2, 2025).

With this projection, annual inflation is expected to decline to 1.8 percent in May 2025, down from 1.95 percent in April.

Permata Bank Chief Economist Josua Pardede presented an even deeper deflation estimate. According to him, May likely recorded a monthly deflation of 0.27 percent.

"We anticipate that May 2025 will show monthly deflation, with an estimated rate of 0.27 percent," said Josua.

He explained that food price normalization following Eid contributed significantly to the deflation, especially through falling prices of red chilies and bird's eye chilies.

However, rice and poultry products are still expected to experience some inflation, albeit at a modest level.

Josua also noted that government-regulated prices recorded deflation. Non-subsidized fuel prices dropped due to weaker global oil prices in April, and airfares declined after the Eid demand surge ended.

"Overall, the inflation dynamics in May 2025 reflect a healthy seasonal adjustment post-Eid, with price pressures remaining manageable," he added.

Under these conditions, year-on-year (yoy) inflation is projected to decline to 1.70 percent from 1.95 percent. Meanwhile, core inflation is expected to edge down slightly to 2.43 percent from 2.48 percent in the previous month. This reduction aligns with falling domestic gold prices and a strengthening rupiah.

Cumulatively, inflation from January through May 2025 is estimated at only 1.29 percent, lower than the same period last year.

"If this forecast materializes, the downward inflation trend in the first half of 2025 will remain consistent with low price pressures," Josua said.

He even projected that deflation could continue into June and August. The government plans to reintroduce a 50 percent electricity tariff discount, similar to the incentives given in January and February. That policy effectively helped to curb monthly inflation.

However, Josua cautioned that this effect is only temporary. He expects inflation to pick up again in the second half of 2025 as policy stimulus fades and domestic demand improves.

By year-end 2025, inflation is projected to reach around 2.33 percent. This remains within Bank Indonesia’s target, though it is higher than the 1.57 percent recorded at the end of 2024.