Ramadan and Lebaran Result in Higher Consumer Spending in Indonesia
The holy fasting month of Ramadan, the ninth month of the Islamic calender, and subsequent Idul Fitri (or Lebaran) festivities, when many Indonesians go back to their home towns for several days, will arrive soon (on or around 9 July 2013). This annual recurring tradition has some big economic implications as Indonesia's Muslim community increases spending prior and during this period to buy new clothes, shoes, food and drinks as well as transportation fares to travel back to their places of birth.
This year, Indonesian consumers are expected to spend between IDR 120-150 trillion (USD $12-15 billion) during the Ramadan-Lebaran period. This spending pattern is partly supported by government regulation that foresees an extra bonus for all employees (Tunjangan Hari Raya), implying that Lebaran basically is a paid holiday. Apart from that, Indonesians tend to save money prior to the fasting month in order to have more funds to spend during Ramadan and Lebaran. As such, spending peaks during this period, which also translates in the annual peak in inflation as the festivities usually trigger about one percent of inflation (regardless of the economic context).
As 20 to 30 percent of consumer spending is allocated to food and drinks expenditure (particularly syrup and biscuits), producers and retailers have been busy to guarantee sufficient stockpiles. Usually food and drinks producers start to increase production output two months ahead of the Ramadan. The government has also announced to monitor the market and act if there is a sudden jump in prices due to a shortage of a certain product. Minister of Trade, Gita Wirjawan, said that stockpiles of sugar, rice, oils, soy, corn and chicken meat are safe. However, there is still a shortage of beef on the Indonesian market. The government tries to overcome this situation by importing 45,000 cows in June and July.
|Total Turnover Food & Drinks
in trillion IDR rupiah
¹ indicates a forecast
Source: Investor Daily
Indonesia is a secular democratic country that has a Muslim-majority population. The country contains the largest Muslim population of all countries in the world. The current number of Muslim inhabitants is estimated to be around 207 million individuals, most of whom adhere to Sunni Islam.