INDEF: Eid Bonus Deemed Insufficient to Boost Consumer Spending During Ramadhan
Jakarta — The Eid holiday bonus (THR), which typically supports consumer spending during Ramadhan and Eid al-Fitr, is expected this year to be insufficient to substantially drive purchasing power. Inflationary pressures from multiple sources are likely to mean that this additional income is largely channelled into absorbing price increases rather than boosting consumption.
Abdul Manap Pulungan, a researcher at INDEF’s Centre for Macroeconomics and Finance, noted that whilst the Eid period has traditionally stimulated economic activity through consumer spending, holiday travel, and money circulation from THR payments, this year’s situation differs due to pressures on the domestic economy from global factors.
“With Ramadhan and Eid, consumption typically increases, especially from THR payments and holiday travel activities. However, the challenge is that inflation is also rising,” Abdul Manap stated during INDEF’s public discussion titled “Eid Economy Amid War Turbulence” on Monday 9 March 2026.
He explained that inflationary pressures stem from multiple sources simultaneously, including increases in food prices, energy costs, and rupiah weakness. These conditions mean that the additional household income does not translate fully into increased consumption.
According to Abdul Manap, THR often merely serves as a buffer to prevent consumer purchasing power from declining further due to price surges. “The additional income is often only used to cushion the impact of inflation, rather than genuinely increasing consumption,” he said.
February inflation data also indicated that price pressures are beginning to mount ahead of Ramadhan. Annual inflation stood at approximately 4.76 percent, with significant increases in government-regulated price components and foodstuffs.
Additionally, rising global energy prices threaten to add further inflationary pressure. Geopolitical tensions in the Middle East have sparked market concerns about potential disruptions to global oil supplies, which could impact domestic energy costs.