• Signaling easing in household sentiment, Indonesia’s Consumer Confidence Index (CCI) moderated to 120.9 in May-26 from 123.0 in Apr-26, the lowest reading since Sep-25. The drop was primarily driven by weaker perception with Current Economic Condition Index falling 4.3pts to 112.2. Consumers also became more cautious toward durable goods purchases as reflected by 4.3pts fall in the corresponding index to 108.3, while perception of job availability over the past 6 months weakened 3.8pts to 105.0. The softer reading suggests households are becoming more prudent amid elevated economic uncertainty and higher borrowing costs following BI’s recent rate hikes.
• Although income expectations eased to 136.5, consumers were slightly more optimistic on job availability and business activity over the next 6 months, with both indices recording modest gains. This indicates that households continue to expect economic conditions to improve despite current challenges, supported by ongoing government spending, infrastructure projects, and relatively stable labor market conditions.
• ⁠From a market perspective, this CCI reading reinforces that domestic demand is entering a phase of normalization rather than acceleration. For BI, the data suggest demand-side inflationary pressures remain contained despite recent pickup in headline inflation, allowing for BI to retain its current policy stance while focusing on FX stability.
• ⁠Looking ahead, we expect consumer confidence to be potentially softer than the exceptionally strong levels recorded earlier this year. The combination of tighter monetary policy, rising inflation—particularly food prices—and IDR depreciation will continue to weigh on household purchasing power in the near term. Thus, with the pace of expansion moderating compared with the strong performance seen in 1Q26, a sharper deterioration in sentiment is likely to emerge without fiscal support and improving business prospects.