Lack of Formal Jobs Seen Weighing on Indonesians' Buying Power

January 15, 2026 | 11:14 am

TEMPO.CO, Jakarta - Bhima Yudhistira, Executive Director of the Center of Economic and Law Studies (Celios), identified factors that will increase pressure on consumer purchasing power this year in Indonesia. He believes the lack of formal employment or job opportunities is one factor putting pressure on people's purchasing power.

"So, this pressure on consumer purchasing power is expected to increase throughout 2026. One of the triggers is the difficulty in finding work in the formal sector," Bhima Yudhistira said, as quoted by Antara, Thursday, January 15, 2026.

Furthermore, he said that the tendency for commodity prices to rise ahead of Ramadan could also be a factor suppressing purchasing power. He explained that although production of several staple foods, including rice, is recorded as a surplus, the supply of these commodities is also needed for the Free Nutritious Meals (MBG) program.

Furthermore, the MGB program will be implemented more extensively with a larger budget compared to 2025. "This will create or trigger an increase in food inflation, which is already starting to be felt," Bhima said.

To address pressures on public purchasing power and consumption, he stated that the government needs to revise tax policy. This will impact the middle class and encourage domestic consumption to remain an effective driver of growth. One possible approach is to cut the Value Added Tax (VAT) to 8-9 percent to boost public consumption.

The transmission of interest rate reductions also needs to be accelerated so that customers currently making installment payments, for example on mortgages (KPR) or motor vehicle loans, can receive lower installments.

"Furthermore, what needs to be done is to create more jobs. So, a more aggressive fiscal policy with a wide deficit must be examined to see whether the quality of spending can encourage job creation," said Bhima.

Bank Indonesia (BI) noted that consumer confidence in economic conditions remained strong in December 2025. This is reflected in the December 2025 Consumer Confidence Index (CCI), which was at an optimistic level, above 100, at 123.5. However, this figure decreased by 0.5 points compared to the November 2025 CCI, which was recorded at 124.

The Current Economic Conditions Index (CECI) and the Consumer Expectations Index (CEI) also recorded slight decreases, from 111.5 and 136.6 in November 2025 to 111.4 and 135.6 in December 2025, respectively. Meanwhile, the Job Availability Index (IKLK) reportedly increased to 106.5, compared to 103.7 the previous month.

Read: Survey: Indonesia's Job Availability Index Rises into Optimistic Zone at 106.5

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