Indonesian Consumer Confidence declines in September 2025 Amid Economic Concerns
Table of Contents
- 1. Indonesian Consumer Confidence declines in September 2025 Amid Economic Concerns
- 2. Consumer Confidence Index Drops
- 3. Government Response and Outlook
- 4. Stimulus Measures Introduced
- 5. Understanding Consumer Confidence
- 6. Frequently Asked Questions about Consumer confidence
- 7. How might PurbayaS findings influence business strategies for companies operating in Indonesia?
- 8. Purbaya uncovers Reasons Behind Indonesia’s Decline in Consumer Confidence
- 9. The Recent Dip in Indonesian Consumer Sentiment
- 10. Key Drivers of Declining Confidence
- 11. Impact on Specific Consumer Segments
- 12. Analyzing the Data: Key Indicators
- 13. case Study: The automotive Sector
- 14. Benefits of Understanding the Decline
- 15. Practical Tips for Businesses Navigating the Downturn
Jakarta – A recent survey indicates a weakening in Indonesian consumer confidence during September 2025, fueling concerns about a broader economic slowdown.
Consumer Confidence Index Drops
The Consumer Confidence index (IKK) registered a level of 115 in September 2025, according to data released by Bank Indonesia. This marks a decrease from the 117.2 recorded in August 2025, and from the 118.1 reported in July 2025, signifying a continuing trend of declining optimism among consumers.
The decline in consumer sentiment is thought to be linked to recent economic headwinds and associated public demonstrations. According to the latest data from the World Bank, Indonesia’s economic growth slowed to 4.8% in the second quarter of 2025, down from 5.2% in the first quarter.
Government Response and Outlook
Finance Minister Purbaya Yudhi Sadewa acknowledged the connection between the economic slowdown and recent public unrest. He stated that a perceived lack of economic progress contributed to increased protests against government policies during the period of late August and early September.
“The economic slowdown was palpable in September, leading to a noticeable loss of hope among citizens, which manifested in increased exhibition activity,” Minister Sadewa explained during a briefing on Wednesday, October 8th, 2025.
Despite the recent dip, Minister Sadewa expressed optimism that confidence levels will rebound in October, citing ongoing government efforts to stabilize the economy. He emphasized the potential danger of a continued decline in the IKK, which could exacerbate instability.
“We are already seeing a return of optimism, and we anticipate that the October survey will reflect this positive shift,” the Minister added. Current data collection for the October IKK is still ongoing.
| Month | Consumer Confidence Index (IKK) |
|---|---|
| july 2025 | 118.1 |
| August 2025 | 117.2 |
| September 2025 | 115 |
Did You Know? The Consumer Confidence Index is a key indicator used by policymakers to gauge consumer sentiment and predict future spending patterns.
Alongside the decline in the IKK, a parallel drop in public trust in the government was also observed between July and September. Minister Sadewa indicated this erosion of trust reached a level “which, if not addressed, could pose significant risks.”
Stimulus Measures Introduced
in response to the unfavorable trend, the government has announced a series of medium-term stimulus programs. These initiatives include a new internship program designed to support Small and Medium Enterprises (SMEs), with an initial funding allocation aimed at creating opportunities for 20,000 individuals. The program will be expanded in stages, targeting a total of 100,000 placements as funding is absorbed.
“We are proceeding cautiously with fund allocation, ensuring that resources are deployed effectively as the program demonstrates its ability to create jobs,” Minister Sadewa stated.
Pro Tip: Keep a close watch on government announcements regarding economic stimulus to identify potential opportunities for businesses and individuals.
Understanding Consumer Confidence
Consumer confidence is a crucial metric for assessing the overall health of an economy. It reflects the degree to which people are optimistic about their financial situation and their willingness to spend money. A high IKK typically indicates a strong economy, while a low IKK may signal an impending slowdown.
Several factors can influence consumer confidence, including employment rates, inflation, interest rates, and government policies. External events, such as global economic conditions or geopolitical instability, can also play a role. The IKK is frequently enough used by central banks and governments to inform monetary and fiscal policy decisions.
in Indonesia, the IKK is especially important due to the country’s large and rapidly growing consumer base. Consumer spending accounts for a significant portion of Indonesia’s Gross Domestic Product (GDP), making it a key driver of economic growth. Statista estimates household spending in Indonesia reached $348.5 billion in 2023.
Frequently Asked Questions about Consumer confidence
- What is the Consumer Confidence Index? The Consumer Confidence Index is a measure of how optimistic consumers are about the state of the economy and their personal financial situation.
- Why is consumer confidence important? Consumer confidence is a leading indicator of future economic activity,as it influences spending and investment decisions.
- What factors affect consumer confidence? Employment levels, inflation, interest rates, and government policies all play a role in shaping consumer sentiment.
- How is the IKK calculated in indonesia? The IKK is based on consumer surveys conducted by Bank Indonesia (BI) assessing current conditions and expectations.
- What are the potential consequences of declining consumer confidence? A sustained decline in consumer confidence can lead to reduced spending, slower economic growth, and increased unemployment.
- What is the government doing to boost consumer confidence? The government is implementing stimulus programs and working to maintain economic stability to restore public trust.
How might PurbayaS findings influence business strategies for companies operating in Indonesia?
Purbaya uncovers Reasons Behind Indonesia’s Decline in Consumer Confidence
The Recent Dip in Indonesian Consumer Sentiment
Recent data indicates a concerning trend: a decline in consumer confidence in Indonesia. Purbaya, a leading economic analyst firm, has released a detailed report pinpointing several key factors contributing to this downturn. Understanding these influences is crucial for businesses operating within the Indonesian market, as well as for policymakers aiming to stimulate economic growth. This analysis delves into Purbaya’s findings, exploring the core issues impacting Indonesian consumer behavior and offering insights into potential future scenarios. We’ll cover everything from inflation rates to global economic uncertainty and its impact on the archipelago.
Key Drivers of Declining Confidence
purbaya’s research identifies a confluence of factors, rather than a single cause, behind the weakening consumer outlook. These can be broadly categorized as follows:
* Rising inflation & Cost of Living: A notable driver is the sustained increase in the cost of goods and services. while Indonesia has historically maintained relatively stable inflation, recent global events – including supply chain disruptions and the war in Ukraine – have pushed up prices for essential items like food, fuel, and electricity. This directly impacts household budgets and reduces disposable income.
* Global Economic Slowdown: The global economic slowdown, particularly in key trading partners like China and the US, is impacting Indonesia’s export performance. Reduced export revenue translates to slower economic growth and increased economic uncertainty, which filters down to consumer sentiment.
* Interest Rate Hikes: Bank Indonesia (BI) has been implementing interest rate hikes to combat inflation.while necessary to control price increases, higher interest rates make borrowing more expensive, discouraging large purchases like homes and vehicles. This impacts consumer spending on durable goods.
* Commodity Price Volatility: Indonesia is a major commodity exporter. Fluctuations in commodity prices, particularly for palm oil, coal, and nickel, create volatility in the economy and contribute to uncertainty.
* Political Landscape & policy Changes: While not a primary driver, perceived instability or uncertainty surrounding government policies can also dampen consumer confidence.
Impact on Specific Consumer Segments
The decline in consumer confidence isn’t uniform across all segments of the Indonesian population. Purbaya’s report highlights disparities:
* Lower-Income households: These households are disproportionately affected by rising food and fuel prices, as a larger percentage of their income is allocated to essential expenses. This group exhibits the most significant drop in confidence.
* middle Class: the Indonesian middle class, a key engine of economic growth, is becoming more cautious with their spending due to concerns about job security and future economic prospects. They are delaying discretionary purchases.
* Urban vs. Rural: Urban consumers, generally more exposed to global economic trends and financial markets, tend to be more sensitive to economic fluctuations. Rural consumers, while less affected by global events, are still impacted by rising food prices.
Analyzing the Data: Key Indicators
Purbaya’s analysis relies on several key economic indicators:
- Consumer confidence Index (CCI): The CCI has steadily declined over the past six months, reaching a level not seen as the early stages of the COVID-19 pandemic.
- Retail Sales Growth: Retail sales growth has slowed significantly,indicating a reduction in consumer spending.
- Unemployment Rate: While the unemployment rate remains relatively stable, there are concerns about the quality of employment, with a rise in informal sector jobs.
- Inflation Rate: The headline inflation rate has exceeded BI’s target range, prompting further monetary policy tightening.
- Rupiah Exchange Rate: Depreciation of the Indonesian Rupiah (IDR) against the US dollar adds to inflationary pressures and increases the cost of imported goods.
case Study: The automotive Sector
The automotive sector provides a clear example of the impact of declining consumer confidence. Sales of new vehicles have experienced a noticeable slowdown,particularly in the multi-purpose vehicle (MPV) and sport utility vehicle (SUV) segments. Dealers report increased foot traffic but lower conversion rates,as potential buyers postpone purchases due to economic uncertainty and higher financing costs. This trend reflects a broader pattern of delayed discretionary spending.
Benefits of Understanding the Decline
Recognizing the factors driving the decline in consumer confidence offers several benefits:
* For Businesses: Allows for more accurate forecasting, informed marketing strategies, and the advancement of products and services tailored to the current economic climate.
* For Policymakers: Provides insights for implementing targeted policies to stimulate economic growth and restore consumer confidence.
* For Investors: Helps assess risk and identify potential investment opportunities.
Businesses operating in Indonesia can take several steps to mitigate the impact of declining consumer confidence:
* Focus on Value: Offer products and services that provide clear value for money.
* Promote Affordability: consider offering financing options or discounts to make purchases more accessible.
* Strengthen Customer Loyalty: Invest in customer relationship management (CRM) to retain existing customers.
* Diversify Product Offerings: Explore opportunities to offer lower-priced alternatives or essential goods.
* Monitor Economic Indicators: Stay informed about key economic trends and adjust strategies accordingly.