5 September 2025 (closed)
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Household Consumption in Indonesia
Household consumption is the most important fundament of the Indonesian economy as Indonesia has a huge population that is becoming wealthier over time, hence spends more money on a variety of products and services, thus being the biggest engine of economic growth. After all. if demand for products and services is high, then more needs to be produced, implying jobs are generated.
Household consumption, which is defined as is the total amount of money that all households in a country spend on goods and services for their own use, is typically broken down into three main categories:
- Durable Goods: These are items that are expected to last for a long time (more than three years). Examples include cars, furniture, appliances, and electronics.
- Non-Durable Goods: These are items that are consumed quickly or have a short lifespan. Examples include food, clothing, fuel, and medication.
- Services: This category includes all payments for services provided by others. Examples are haircuts, medical appointments, movie tickets, public transportation, and rent.
Overview of Household Consumption in Indonesia
Household consumption consistently contributes around 55 percent to Indonesia's gross domestic product (GDP), making it the primary driver of economic growth in Southeast Asia's biggest economy. This is actually a higher proportion than in many other major economies, highlighting the critical role that domestic demand plays for the Indonesian economy.
Generally, over the past decades, we have seen a growing middle class population in Indonesia. This is crucial for household consumption because the middle class is a major consumer of discretionary goods, and so an increase in this group implies long-term economic stability and consumption growth.
However, in recent years there has been some concern over the strength of Indonesia's middle class, with some reports claiming that the middle class is contracting in size, reflected in shifting spending habits in response to recent economic pressures and the post-COVID-19-crisis environment. Seemingly, consumer spending patterns have somewhat changed as there has been a noticeable decline in discretionary spending on big-ticket items such as cars (while spending on basic needs like food and fuel remained steady). It indicates a more cautious consumer mindset.
Meanwhile, Indonesia has been seeing a rapid digital transformation since the early 2010s. The rapid rise of digital platforms, including e-commerce and digital wallets, is fundamentally reshaping how Indonesians consume goods and services. Digital payments are becoming a preferred method, and there has been a significant increase in digital lending, which has the potential to influence future consumption patterns and financial inclusion.
Growth of Household Consumption in Indonesia
It is always hoped to see household consumption growth above 5.0 percent (y/y) in Indonesia as this is a growth level that is regarded to generate enough employment opportunities for the local population to sustain economic growth at a high pace and avoid the middle income trap.
Unfortunately, household consumption growth has been having difficulty to grow above 5.0 percent (y/y) in recent years (see table 1).
Table 1; Indonesia’s Household Consumption Growth (annual % change):
2019 | 2020 | 2021 | 2022 |
2023 | 2024 | 2025 | |
Quarter I | +5.02% | +2.83% | -2.22% | +4.35% | +4.53% | +4.91% | +4.95% |
Quarter II | +5.18% | -5.52% | +5.96% | +5.52% | +5.22% | +4.93% | +4.97% |
Quarter III | +5.01% | -4.05% | +1.02% | +5.40% | +5.05% | +4.91% | |
Quarter IV | +4.97% | -3.61% | +3.56% | +4.50% | +4.47% | +4.98% | |
Full-Year | +5.04% | -2.63% | +2.01% | +4.94% | +4.82% | +4.94% |
Source: Badan Pusat Statistik (BPS)
There are three traditional peaks in household consumption in Indonesia every year:
- The Ramadan-Idul Fitri period (Islamic celebrations that together last for about 35 days, including a national holiday).
- The Christmas-New Year festivities (including a two-week school holiday).
- The 'summer break' school holiday in the second half of June and first half of July, when many people spend money on travel, leisure and entertainment.
On these occasions, people spend a lot of money on food, drinks, transportation (traveling), and clothes. While Christmas-New Year and the summer break are always at the same dates on the Gregorian calendar, the Ramadan-Idul Fitri period moves forward by around 10 days (because the Islamic calendar is around 10 days shorter). The shifting of this period causes some disruptions in terms of household consumption data on an annual and monthly basis.
These seasonal peaks are often supported by the disbursement of holiday allowances (THR) and other bonuses, which boost people's purchasing power.
What Are the Sub-Categories of Household Consumption in Indonesia?
Within household consumption, the key sub-category is food and drinks (non-restaurants). This sub-category accounts for slightly over 40 percent of household consumption in Indonesia. This is not a surprise, though, as food and drinks are a basic necessity. It covers essentially all spending on food and beverages that are not prepared and consumed at a commercial establishment such as a restaurant, cafe, or hotel.
Another important category is transport and communication, which accounts for about 22 percent of total household consumption. This sub-category includes (1) all spending related to the movement of people and goods, whether for personal or business use (such as public transport, the buying of new and old cars, and fuel and maintenance of vehicles), and (2) all spending on postal, telephone, and internet services (such as internet, telephone and postal services, and purchases of communication devices such as tablets and smartphones).
The third-biggest sub-category is housing and household supplies, which accounts for about 12-13 percent of total household consumption. This category is a comprehensive measure of a household's regular spending on shelter and maintaining a comfortable living environment. It includes (1) the cost of renting a house, apartment, or other dwelling, payments for essential services (such as electricity, water and gas), and spending on routine upkeep of the home, and (2) purchases of a variety of goods used within the home (such as refrigerators, washing machines, air conditioners, kitchen equipment, cleaning products, detergents, paper towels, furniture and kitchenware).
Table 2; Distribution of Indonesia’s Household Consumption:
Sub-categories | 2019 | 2020 | 2021 | 2022 |
2023 | 2024 |
Food & Drinks (Non-Restaurants) | 39.4% | 41.2% | 41.2% | 41.1% | 40.9% | 41.2% |
Clothes, Footwear & Related Services | 3.6% | 3.5% | 3.4% | 3.3% | 3.2% | 3.1% |
Housing & Household Supplies | 12.8% | 13.3% | 13.2% | 12.8% | 12.4% | 12.1% |
Health & Education | 6.7% | 7.3% | 7.3% | 7.0% | 6.8% | 6.7% |
Transport & Communication | 22.8% | 20.2% | 20.1% | 21.3% | 22.2% | 22.3% |
Restaurants & Hotels | 10.0% | 9.6% | 9.8% | 9.9% | 9.9% | 10.0% |
Others | 4.5% | 4.7% | 4.8% | 4.6% | 4.5% | 4.6% |
Household Consumption | 100% | 100% | 100% | 100% | 100% | 100% |
Source: Badan Pusat Statistik (BPS)