Indonesian Consumer Confidence Suddenly Drops: What Is Happening?

Public expectations for the Indonesian economy are beginning to confront a reality that does not entirely match expectations. Bank Indonesia (BI) has just released its Consumer Survey report for the period of May 2026. The results show that consumer confidence in economic conditions weakened compared to the previous month. BI reported that the Consumer Confidence Index (IKK) for May 2026 fell to 120.9, down 2.1 points from April 2026’s level of 123.0. Although weakening, the IKK remains in the optimistic zone as it stays above the 100 level. However, this decline still needs to be scrutinised. The May 2026 IKK is the lowest since September 2025. During that period, consumer confidence was also pressured alongside rising domestic uncertainty due to large-scale demonstrations across various regions in the country. With social and economic conditions that were somewhat unstable at the time, public trust in the economic outlook also came under pressure. Now, although the situation is different, the decline in the IKK again indicates that consumer optimism is beginning to erode slightly. This weakening of consumer confidence is also linked to the domestic financial market being under pressure. The rupiah exchange rate is still overshadowed by depreciation against the United States (US) dollar, while the Composite Stock Price Index (IHSG) also plunged quite deeply at one point. These conditions are making public perception of the economy more cautious, as pressure on the rupiah and stock market often signals that the economy is facing greater uncertainty, both from global and domestic sides. In addition to the IKK, BI’s Consumer Survey report also showed pressure on several of its constituent indices. The weakening is evident not only in future public expectations but also in consumers’ assessment of current economic conditions. One notable index is the Current Economic Condition Index (IKE). In May, the IKE fell to 112.2, from 115.1 in April. The decline in the IKE indicates that consumers’ perception of current economic conditions is starting to weaken. This index reflects the public’s assessment of income conditions, job availability, and purchases of durable goods compared to six months prior. The public is beginning to feel that current economic conditions are not as strong as the previous month. Although still in the optimistic zone, the significant weakening signals that purchasing power, income perception, and labour market conditions are starting to feel heavier. Looking more closely, the deepest decline occurred in the Current Income Index (IPSI). This index fell by 4.9 points to 123.2 in May 2026, from 128.1 in April 2026. The IPSI describes consumers’ assessment of their current income conditions compared to six months earlier, which in the context of May 2026 means compared to around December 2025. This decline indicates that some members of the public are starting to assess their current income conditions as not as good as previously expected. At the end of 2025 or early 2026, public optimism for the new year was still quite strong. However, the reality in May 2026 shows that income perception has started to decline. This could be a signal that people are beginning to be more cautious in viewing household financial conditions, especially amidst price pressures, rupiah depreciation, and lingering economic uncertainty. Pressure was also seen in the Job Availability Index (IKLK). This index fell to 105.0 in May 2026, from 108.8 in April, a drop of 3.8 points. The decline in the IKLK indicates that the public’s perception of current job availability is also decreasing compared to six months ago. This means consumers are starting to see job opportunities as less robust than before. This condition is important to monitor because the perception of employment is closely linked to consumer confidence. When people feel job opportunities are more limited, they tend to be more cautious with their spending. If the weakening perception of income and employment continues, household consumption has the potential to be restrained, even though public consumption is one of the main pillars of Indonesia’s economic growth.