• Indonesia’s January consumer confidence index slipped slightly, falling to 127.2 from December’s eight-month high of 127.7. This modest decline reflects growing caution among consumers as they navigate evolving economic conditions both domestically and globally. The decrease, though not drastic, indicates a shift in sentiment that could influence spending patterns and broader economic activity in the coming months.
• ⁠⁠⁠A closer look at the sub-indices reveals a mixed picture, with most components showing signs of deterioration. The assessment of current economic conditions dropped 2.5 points to 113.5, signaling that consumers are becoming more conservative in their evaluation of the present environment. Job availability also registered a slight decline, dipping 0.6 points to 137.0, while perceptions of job availability compared to six months ago fell more sharply by 4.5 points to 107.7. This suggests that while the labor market remains relatively resilient, there are emerging concerns about its momentum, possibly linked to global uncertainties and the lingering effects of domestic policy adjustments.
• ⁠⁠Income-related expectations also reflected a cautious tone. The current income sub-index dipped 1.3 points to 122.6, indicating that households may be feeling the pinch of cost pressures or anticipating softer wage growth ahead. This decline in sentiment around current income could temper discretionary spending, particularly in non-essential sectors, potentially impacting retail and services industries.
• ⁠⁠However, not all indicators pointed to gloom. The economic outlook sub-index improved 1.3 points to 140.8, suggesting that despite current apprehensions, consumers remain optimistic about the broader economic trajectory. This could be driven by expectations of policy support, easing inflationary pressures, or anticipated improvements in external demand. Additionally, income expectations for the next six months rose 1.5 points to 144.8, reflecting confidence that household financial conditions may improve in the medium term.
• ⁠Looking forward, January’s data signals growing caution in consumer confidence, driven by sluggish demand. This is reflected in the inflation rate, which slowed to 0.76% YoY—well below SSI’s projection of 1.73%—pointing to weaker consumer spending and hinting at lingering structural challenges. These trends raise concerns about the sustainability of economic momentum beyond the seasonal festivities. While consumer confidence may remain above average in the first quarter, it is likely to soften as the temporary boost from seasonal factors fades, cementing our estimate of a sub 5% GDP growth in 2025 of 4.97%.