Rice Prices to Experience Inflation Amid Deflation in August 2025

JAKARTA, KOMPAS – Rice has experienced inflation amidst the deflation occurring in August 2025. In fact, rice has also seen annual inflation. This is due to the increase in rice prices at the milling, wholesale, and retail levels on a monthly and annual basis.

The Central Statistics Agency (BPS) announced on Monday (1/9/2025) that in August 2025, Indonesia experienced a monthly deflation of 0.08 percent. The commodities contributing to this deflation were tomatoes, bird's eye chilies, air transportation fares, and gasoline.

However, there are several commodities that experienced and contributed to inflation in that month, namely red onions and rice. The monthly inflation rate and contribution of red onions were 7.59 percent and 0.05 percent, respectively.

"Meanwhile, rice experienced a monthly inflation rate of 0.73 percent in August 2025, contributing 0.03 percent to the overall inflation. The monthly inflation rate for rice is already lower than that of July 2025, which reached 1.5 percent," said Deputy for Distribution and Services Statistics at BPS, Pudji Ismartini, during an online press conference held in Jakarta.

Rice inflation, both monthly and annually, occurred because rice prices at the milling, wholesale, and retail levels rose.

BPS also noted that in August 2025, Indonesia experienced an annual inflation rate of 2.31 percent. The commodities with the largest contribution to inflation were red onions, rice, tomatoes, cooking oil, gold jewelry, and ground coffee. Specifically, the annual inflation rate for rice was 4.24 percent.

Pudji explained that the inflation of rice, both on a monthly and annual basis, occurred due to the increase in rice prices at the milling, wholesale, and retail levels. This rice includes various qualities of rice in Indonesia, including medium and premium rice.

The national average price of various types of rice at the milling level in August 2025 reached Rp 13,596 per kilogram (kg), an increase of 1.87 percent year-on-year and 6.15 percent year-on-year. At the wholesale level, the average price is Rp 14,292 per kg, reflecting a monthly increase of 0.64 percent and a year-on-year increase of 5.56 percent.

"The average price of rice at the retail level reached Rp 15,393 per kg. This rice price increased by 0.73 percent on a monthly basis and 4.24 percent on an annual basis," said Pudji.

The government has collaborated with various stakeholders to mitigate the rise in prices and inflation of rice. Two measures taken include distributing rice assistance to low-income families and implementing the Stabilization of Supply and Food Prices (SPHP) program.

On August 30, 2025, for instance, the government launched the Affordable Food Movement (GPM) simultaneously in 4,320 sub-districts across 38 provinces. The amount of SPHP rice distributed was 43,665 tons in 5 kg packages. The SPHP rice was sold at a price of Rp 60,000 per 5 kg.

The Head of the National Food Agency (Bapanas), Arief Prasetyo Adi, stated that the GPM is one of the government's main programs to maintain the stability of the national food supply and prices, including rice. Since Bapanas initiated it in 2022, the GPM has become an important instrument for the government to provide staple foods at affordable prices directly to the community.

From January to August 29, 2025, for instance, GPM has been held at 7,033 locations across 326 districts/cities in 36 provinces. The GPM involved local governments, Perum Bulog, ID FOOD, regional state-owned enterprises managing the food sector, business associations, as well as farmers and food SMEs.

"Specifically, the distribution of SPHP rice from January to August 29, 2025, reached 284,200 tons. Meanwhile, from July to December 2025, we are targeting to distribute 1.3 million tons of SPHP rice through various channels, including traditional markets and modern retail," he said.

The Institute for Development of Economics and Finance (Indef) assesses that the national rice issue this year is not solely about rising prices. Behind the price increase, there exists a crisis of quality and rice trade management.

Abra Talattov, Head of the Center for Food, Energy, and Sustainable Development at the Indonesian Institute of Sciences (Indef), stated that the rice quality crisis stems from the policy of purchasing dry harvested grain (GKP) from farmers of any quality, or without quality standards, at Rp 6,500 per kg. At the time, this policy was not accompanied by an increase in the highest retail price (HET).

GKP of any quality results in lower-quality rice. Furthermore, production costs are higher than producing rice from unhulled rice with clear quality standards.

"This condition has triggered a surge in cases of adulterated rice that violate regulations. Referring to findings from the Ministry of Agriculture, out of 136 samples of premium rice traded, 85.6 percent did not meet quality standards, 59.8 percent were sold above the highest retail price, and 21.6 percent had their volume reduced," he said.

Rice mills enjoy the largest share of profits from rice price formation at the consumer level, namely 55.4 percent.

In addition, Abra also explained the share of profits from the formation of rice prices at the consumer level for each level of the rice supply chain. Farmers enjoy a net profit share from the formation of rice prices at the consumer level of 25.2 percent.

Rice milling enjoys the largest share of profits, amounting to 55.4 percent. Meanwhile, distributors and retailers only receive a profit of 9.3 percent.

"This is in line with data from the Ministry of Agriculture which states that, although large mills account for only 0.9 percent of the total mills in Indonesia, they control more than 60 percent of the national rice absorption. This dominance not only weakens the bargaining position of farmers but also increasingly pressures small mills," he said.

Therefore, Abra urged the government to massively distribute the government rice reserves managed by Bulog to mitigate the rise in rice prices. This step is important to prevent the 3.93 million tons of rice in Bulog's warehouses from piling up and deteriorating in quality.

"In addition, the government also needs to abolish the policy of purchasing GKP of any quality and improve the trade system for large-scale mills, which is dominated by around 0.9 percent of large mills," he said.

On August 22, 2025, the National Food Agency has increased the HET for medium rice. The new HET for medium rice in zone 1 is set at Rp 13,500 per kg, in zone 2 at Rp 14,500 per kg, and in zone 3 at Rp 15,500 per kg. Previously, the HET for medium rice in zone 1 was Rp 12,500 per kg, in zone 2 was Rp 13,100 per kg, and in zone 3 was Rp 13,500 per kg.

Kompas observed that the adjustment to the HET resulted in the calculation of the disparity in the price of medium-sized rice at the consumer level compared to the HET for medium-sized rice in the Bapanas Food Price Panel based on the new HET for medium-sized rice. This resulted in a lower price disparity compared to the old HET.

Based on data from the Food Price Panel of Bapanas, as of September 1, 2025, the national average price of medium rice is Rp 14,090 per kg. With the new HET, the price disparity is only 4.37 percent. Meanwhile, if using the old HET, the disparity is 12.72 percent.