JakartaGlobe-Mar 3
Indonesia’s economy is grappling with weakening consumer demand, as two consecutive months of deflation point to declining purchasing power and rising job losses. With Ramadan approaching, spending is expected to remain subdued as many Indonesians prioritize saving over discretionary purchases.
Data from Indonesia’s Central Statistics Agency (BPS) showed a 0.76 percent month-on-month deflation in January, followed by a 0.48 perce t decline in February. Public policy expert Achmad Nur Hidayat from UPN Veteran Jakarta said the trend reflects sluggish domestic demand, exacerbated by ongoing layoffs. “The start of this year has been marked by two consecutive months of deflation, indicating weak household spending. Additionally, layoffs in 2024 totaled 77,965 cases, with another 4,050 recorded in January 2025,” Achmad said on Monday. Despite the weak start to the year, he expects economic activity to pick up during Ramadan, though at a more moderate pace than in previous years. While food and beverage small businesses remain resilient, the apparel sector faces increased competition from imports.
Seasonal spending is expected to rise ahead of Eid, fueled by government disbursement of holiday bonuses (THR) for civil servants, which will total Rp 50 trillion ($3.2 billion) in 2025, slightly higher than last year’s Rp 48.7 trillion. The government is also accelerating THR payments to ensure broader cash circulation. “However, there are signs that people will be more selective with their spending this year,” Achmad said. A 2024 survey indicated that 67 percent of Indonesians allocated at least 25 percent of their bonuses for Ramadan and Eid shopping. In 2025, however, economic uncertainty has prompted households to prioritize savings or debt payments over discretionary spending. Consumer confidence has also dipped, signaling cautious sentiment despite optimism in the retail sector. The Indonesian Shopping Center Association (APPBI) projects a 15-20 percent rise in Ramadan retail transactions compared to regular months, a slower increase than the 30 percent jump seen in 2024. Read more at: https://jakartaglobe.id/business/deflation-and-layoffs-weaken-indonesias-ramadan-spending
