Sluggish Economy, People Choose To Live Frugally And Curb Shopping

Signs of a sluggish economy are increasingly evident. People now tend to hold back on consumption and choose to live frugally. 

The latest Bank Indonesia (BI) consumer survey noted that the Consumer Confidence Index (CCI) fell again in May 2025. 

The May 2025 Consumer Confidence Index (CCI) was recorded at 117.5 or lower than the CCI in the previous month which was 121.7. 

Chief Economist of Bank Central Asia (BCA) David Sumual said that the decline in the CCI was due to economic instability, both globally and domestically. As well as the fact that people's purchasing power has not recovered. 

He highlighted the decline in the durable goods index which is the main indicator of purchasing power, which is reflected in the sluggish consumption of the community at various important moments. This index was recorded to have fallen to 104.1 or lower than the previous April of 110.2. 

"The weakening of purchasing power is clearly seen from the growth of consumption during Eid, sluggish retail sales, minimal activity in sacrificial shopping during Eid al-Adha, to the decline in automotive sales performance," David told Kontan, Wednesday (12/6). 

David explained that the decline in income was not only felt by the lower economic group, but also put pressure on all income levels. The difficulty in getting a job worsened the situation, because most of the income was used to pay off loans, while consumption was forced to be reduced. 

On the other hand, people are now considered to tend to increase the allocation of funds for savings, in response to the economic conditions that are considered to be getting worse. 

"This indicates high caution from consumers. Not only because of limited income, but also because they are preparing to face uncertain economic risks," he added. 

David reminded of the need for more impactful policy interventions from the government. He considered the government's move to release an incentive package worth IDR 24.4 trillion, including wage subsidies, but had a positive impact, although it was still limited to improving public consumption, considering that the middle class had not been fully touched by the policy. 

"Policies need to also target the middle class where this class is the main driver of public consumption," added David. 

Tag: Consumer Confidence Index David Sumual Live Frugally