ECONOMIC REVIEW

DAILY ECONOMIC AND MARKET REVIEW
Office of Chief Economist, PT Bank Mandiri
February 12, 2026 | Daily Economic Review: Transforming Inflation Control through GPIPS Amidst Food Dynamics and Climate Risks

Bank Indonesia, together with the Central and Regional Governments, is implementing a more integrated transformation in inflation control through the Inflation Control and Prosperous Food Movement (GPIPS).
This program encourages a more innovative and sustainable approach, emphasizing not only short-term price stabilization but also strengthening food supply and security structurally from upstream to downstream.

In 2025, national inflation of 2.92% (yoy) remained within the target range of 2.5±1%, reflecting the effectiveness of the policy mix and synergy in controlling inflation, particularly for food.
In January 2026, inflation increased to 3.55% (yoy), due to the low base effect from last year's electricity tariff discounts. Within the GPIPS framework, the strategy focuses on increasing food production through climate adaptation, strengthening distribution and interregional connectivity through efficient logistics and KAD (Food and Agriculture Organization), utilizing food balance data, and strengthening the role of regionally-owned food enterprises (BUMD) as offtakers.

As a reinforcement of the GNPIP, the GPIPS presents three key updates to support inflation control.
These include strengthening the upstream sector to maintain supply availability, especially in the face of extreme weather, more comprehensive inflation control for short-term price stabilization, and strengthening central-regional synergy in supporting priority government programs. In its implementation, the TPIP-TPID (Food and Agriculture Organization) are focusing short-term measures on controlling inflation ahead of the National Holidays (HBKN), adapting to weather risks through strengthening climate-based production, and accelerating the recovery of disaster-affected agricultural land.

Going forward, annual inflation is expected to continue to rise until February due to a low base effect before declining again starting in March 2026, with the risk of imported inflation relatively controlled.
However, the risk of increased demand from priority government programs such as the Free Nutritional Meal Program (MBG) needs to be mitigated. Overall, inflation is projected to remain under control in early 2026 and has the potential to increase in the second half of the year, with year-end inflation estimated at around 2.78% year-on-year. (aph)

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