Spending slowdown: Mystery and elucidation

Alexander Michael Tjahjadi
Research intern at the Centre for Strategic and International Studies

PREMIUM

Jakarta / Mon, October 23, 2017 / 08:14 am

Spending slowdown: Mystery and elucidation

Residents queue to buy 3-kilogram liquefied petroleum gas (LPG) canisters during a market operation in Surakarta, Central Java. (Antara/File)

Signs of weakening consumer spending have appeared since last year. During Idul Fitri in 2016, the inflation rate had decreased from the previous year. Inflation during Idul Fitri this year was 3.8 percent. Comparing this year’s rate with that during Idul Fitri in 2016 when inflation stood at 3.2 percent, the rates are not that different. Some economists say low inflation indicates weakening purchasing power. International institutions have revised their forecast on Indonesia’s economic growth in 2017. While the Asian Development Bank (ADB) maintained its growth projection at 5.1 percent, the International Monetary Fund (IMF) increased its projection to 5.2 percent. The revision is attributed to decreased consumer spending in the last few months. According to the ADB’s revised outlook, in the past six months, household spending was the biggest contributor to ec...