Retail Slowdown: Temporary Dip or Lasting Consumer Shift?

Bank Indonesia’s latest retail survey reveals a projected sales decline through September 2025, followed by a seasonal rebound. The Retail Sales Expectation Index (IEP) forecasts a drop to 146.1 in September before recovering to 169.4 in December, highlighting the fragile balance between consumer confidence and economic headwinds. This volatility signals deeper questions about Indonesia’s consumption-driven growth model in an era of shifting spending patterns and global uncertainty.*

Key Facts & Background

Retail Performance Indicators

• June 2025 Real Sales Index (IPR): 231.9 (-0.2% MoM, +1.3% YoY)

• July 2025 IPR Projection: 222.5 (-4% MoM but +4.8% YoY)

• Expectation Index (IEP):

  • September 2025: 146.1 (down from 159.3)

  • December 2025: 169.4 (holay-driven recovery)

Sectoral Trends

• Growth Drivers:

  • Automotive fuel (+12.1% YoY in June)

  • Food/beverages/tobacco (+6.2% YoY)

  • Spare parts/accessories (+7.5% YoY)

• Weaker Performers:

  • Apparel (+1.4% YoY)

  • Cultural/recreational goods (+1.5% YoY)

Survey Methodology

• 700 retailers across 10 major cities

• Monthly survey running since 1999

• Leading indicator for private consumption (57% of GDP)

Strategic Implications

The Consumption Conundrum
Indonesia’s projected retail slowdown reflects a fundamental tension in emerging market economies. While the December rebound suggests resilience, the interim dip reveals vulnerabilities in Southeast Asia’s largest consumer market. Three structural factors are reshaping spending patterns:

1. Fuel-Led Inflation Hangover
   The 12.1% YoY growth in automotive fuel spending indicates persistent transport cost pressures, which may be crowding out discretionary purchases. This aligns with global trends where energy volatility continues to dictate consumer behavior long after price spikes.

2. The Seasonal Trap
   Reliance on year-end holiday spending (December IEP 169.4) creates economic fragility. Indonesia must develop more balanced consumption drivers, particularly in services and durable goods, to reduce dependency on calendar-based cycles.

3. Geographic Concentration Risk
   With survey data drawn from just 10 cities, the index may overlook rural consumption shifts. As e-commerce penetrates secondary markets, traditional retail indicators require modernization to capture Indonesia’s true consumption picture.