Indonesia sees slower Ramadan spending amid layoffs

World’s largest Muslim-majority nation faces weak consumer demand as job losses rise and households prioritise saving over shopping.

JAKARTA, Indonesia (MNTV) – Indonesia is witnessing lower consumer spending during this year’s holy month of Ramadan compared to previous years, as economic uncertainty and rising layoffs dampen purchasing power.

The country, home to the world’s largest Muslim population, is experiencing two consecutive months of deflation, signaling weakened household demand.

Public policy expert Achmad Nur Hidayat from UPN Veteran Jakarta attributes the sluggish spending to job losses and economic concerns.

“The start of this year has been marked by deflation for two months in a row, reflecting weak household spending. Additionally, layoffs in 2024 reached 77,965 cases, with another 4,050 recorded in January 2025,” he said on Monday.

Despite the seasonal boost in shopping ahead of Eid, many Indonesians are being more cautious with their finances.

A 2024 survey showed that 67 percent of Indonesians allocated at least 25 percent of their holiday bonuses for Ramadan and Eid shopping. However, in 2025, more households are prioritising savings and debt payments over discretionary spending.

Government-mandated holiday bonuses (THR) for civil servants—amounting to Rp 50 trillion ($3.2 billion) this year—are expected to provide some relief, though the increase from last year’s Rp 48.7 trillion is marginal.

The Indonesian Shopping Center Association (APPBI) projects a 15-20 percent rise in Ramadan retail transactions compared to regular months, a slower increase than the 30 percent jump recorded in 2024.

“Accelerating the THR disbursement aims to strengthen household purchasing power, boost domestic consumption, and drive economic activity across key sectors,” Chief Economic Affairs Minister Airlangga Hartarto said.

The government hopes such measures will help meet its 2025 economic growth target of 5.2 percent.

However, with consumer confidence dipping and inflationary pressures looming, Indonesia’s economic recovery remains uncertain during this year’s Ramadan season.