Jakarta – Despite the festive boost from Ramadan and Idul Fitri, Indonesia’s retail sector recorded an underwhelming performance in March 2025, with sales growth barely registering at 0.5 percent year-on-year. This marginal uptick, reported by Bank Indonesia (BI), raises questions about the resilience of consumer spending amid broader economic challenges, including mass layoffs and declining consumer confidence.
Retail Sales Disappoint Despite Festive Season
The retail sales index (RSI) for March, as per preliminary data from Bank Indonesia, crept up to 236.7, a slight increase from 235.4 in the same month last year. BI spokesperson Ramdan Denny Prakoso attributed this modest growth to heightened demand during the Ramadan and Idul Fitri holidays, coupled with aggressive discounts offered by retailers. “The growth aligns with seasonal demand spikes” said Prakoso in a press statement on April 17, 2025, released alongside the data. 
However, the numbers tell a story of uneven recovery. While certain categories like spare parts and accessories for cars and motorbikes saw a robust annual growth of 6.4 percent, other sectors faltered. Information and communication devices, for instance, experienced a sharp decline of 9 percent year-on-year, continuing a downward trend observed since at least August 2024. Cultural goods and recreation, along with food, beverages, and tobacco, posted modest gains of 1.6 percent and 1.4 percent, respectively.
The lackluster performance in March stands in stark contrast to February’s figures, where spare parts and accessories alone surged by 16.1 percent. Analysts suggest that while the festive season typically drives consumption in Indonesia—a country with the world’s largest Muslim population—the economic headwinds this year may have dampened the usual spending frenzy.
Consumer Confidence Wanes Amid Layoffs
Adding to the retail sector’s woes is a noticeable decline in consumer sentiment. A consumer confidence index (CCI) survey released by Bank Indonesia on April 16, 2025, showed a drop to 121.1 in March from 126.4 in February, marking a five-month low. According to BI’s statement, this decline reflects growing pessimism about both current economic conditions and future expectations. “The drop was broad-based, with all sub-components weakening” said spokesperson Denny Prakoso in a separate release.
The sharpest fall came in perceptions of job availability, which plummeted by 8.3 points to 125.9. Views on job conditions compared to six months prior also dipped significantly, falling 5.9 points to a near-neutral 100.3. This unease coincides with over 90,000 layoffs reported since the start of 2024, particularly impacting the urban middle class, a key driver of consumer spending in Indonesia.
Economic anxiety appears to be reshaping spending patterns. The first quarter of 2025 has seen sluggish consumer activity, with fewer people participating in traditional mudik homecoming trips during Ramadan and Idul Fitri. Transportation Minister Dudy Purwagandhi reported on April 13, 2025, that 154.6 million people traveled to their hometowns this year, a 4.7 percent decrease from 162.2 million in 2024, as quoted by Tempo. While the minister dismissed any link to reduced spending power, experts and businesses argue otherwise, pointing to the broader economic downturn and job losses as likely contributors.
Retailers Optimistic About Future Sales
Despite the current gloom, retailers surveyed by Bank Indonesia expressed optimism about the coming months. Many anticipate a sales uptick in May and August 2025, buoyed by national celebrations such as Independence Day on August 17. Respondents also expect inflationary pressures to ease in May, though they foresee a rise and stabilization over the subsequent three months.
This cautious optimism contrasts with the immediate challenges facing the retail sector. Small businesses, such as kiosks offering repair services and cell phone accessories in Jakarta, have relied heavily on festive season discounts to attract customers. Yet, the overall data suggests that such strategies have had limited impact in driving significant growth across the board.
Economic Context and Broader Implications
Indonesia’s retail performance in March must be viewed against the backdrop of a struggling national economy. The country, Southeast Asia’s largest economy by GDP, has faced multiple headwinds in recent years, including global supply chain disruptions, inflationary pressures, and domestic policy uncertainties. The mass layoffs reported in 2024 and early 2025—spanning sectors like manufacturing and technology—have further eroded purchasing power among the middle and working classes.
The decline in sales of information and communication devices, a category that includes smartphones and laptops, is particularly telling. This segment has been in negative territory for over six months, reflecting a shift in consumer priorities toward essential goods amid economic uncertainty. For many Indonesian households, discretionary spending on technology appears to be taking a backseat to necessities like food and transportation.
Moreover, the reduced participation in mudik—a cultural cornerstone during Idul Fitri—signals deeper shifts in behavior. Traditionally, millions of Indonesians travel to their ancestral villages, boosting local economies through spending on transport, gifts, and food. The 4.7 percent drop in travelers this year could indicate not just financial constraints but also a broader reassessment of holiday traditions in the face of economic hardship.
Regional and Global Comparisons
Indonesia’s retail struggles are not unique in the Southeast Asian context. Neighboring countries like Thailand and Malaysia have also reported mixed retail outcomes in early 2025, with festive seasons failing to deliver the expected economic lift. In Thailand, for instance, Songkran celebrations in April saw subdued consumer activity in urban centers, attributed to similar concerns over job security and inflation. Meanwhile, global economic slowdowns and geopolitical tensions continue to impact export-driven economies like Indonesia, where domestic consumption plays a critical role in sustaining growth.
Bank Indonesia’s data also highlights a disparity within the retail sector itself. While spare parts and accessories have shown resilience—likely driven by necessity and the country’s large population of motorbike users—luxury and non-essential categories are lagging. This divergence underscores the polarized nature of economic recovery, where certain segments thrive while others struggle to regain pre-crisis momentum.
Policy Responses and Future Outlook
The Indonesian government and Bank Indonesia face mounting pressure to address the underlying causes of weak retail growth and declining consumer confidence. Stimulus measures, such as targeted subsidies for low-income households or tax breaks for small businesses, could help reinvigorate spending. Additionally, policies aimed at curbing layoffs and stabilizing employment in key sectors might restore faith in the economy over the medium term.
However, the effectiveness of such interventions remains uncertain. With inflationary pressures expected to persist beyond May, according to retailer surveys, the cost of living could continue to squeeze household budgets. For retailers, the challenge will be to balance competitive pricing with profitability, especially in a market where consumer caution is becoming the norm.
Looking ahead, the retail sector’s performance in May and August will serve as critical indicators of whether Indonesia can shake off its current economic malaise. Independence Day celebrations in August, often accompanied by promotional campaigns, could provide a much-needed boost. Yet, without structural reforms to address unemployment and income inequality, any gains may prove temporary.
As Indonesia navigates these turbulent economic waters, the mood among consumers and businesses alike remains one of cautious hope. Whether the anticipated sales upticks materialize, and whether they can translate into broader economic stability, are questions that will shape the country’s trajectory in the months to come.
