Just Because of Gallon Water, Millions of Indonesia's Middle Class Fall into Poverty

The number of middle-class citizens in Indonesia has shrunk significantly over the past five years. Data from the Central Statistics Agency (BPS) shows that in 2019 there were still 57.33 million people classified as middle class, or around 21.45% of the total population. That figure then fell to 47.85 million people, or 17.13%, in 2024.

As a result, around 9.48 million people are no longer in the middle-class group. At the same time, the number of people classified as vulnerable middle class or aspiring middle class has actually increased. This group grew from 128.85 million people, or 48.20%, in 2019 to 137.50 million people, or 49.22% of the total population, in 2024.

A similar trend is seen in the group vulnerable to poverty. Its numbers rose from 54.97 million people, or 20.56%, in 2019 to 67.69 million people, or 24.23%, in 2024. The data indicates a shift of some middle-class citizens into the vulnerable middle-class group and the group vulnerable to poverty.

“We have indeed identified that there is still a scarring effect from the Covid-19 pandemic on the resilience of the middle class,” said BPS head Amalia Adininggar Widyasanti, quoted on Saturday (29/8/2026).

In addition to falling in class, Indonesia’s middle-class population has also been vulnerable to poverty over the past 10 years. This is reflected in the mode of middle-class expenditure, which tends to be closer to the lower boundary of the classification and is increasingly approaching that lower boundary.

This indicates that the middle-class group will find it harder to jump to the upper class, and is vulnerable to falling into the aspiring middle class group, or even the group vulnerable to poverty.

Amalia said the upper boundary for the middle-class classification as of 2024 is 17 times the poverty line (Rp 582,932 per capita per month), or Rp 9.90 million. Meanwhile, the lower boundary for the middle group is 3.5 times Rp 582,932, or Rp 2.04 million.

The mode of expenditure was Rp 2.05 million in 2024, increasingly close to the lower boundary of the middle-class measure of Rp 2.04 million. In contrast, in 2014, the mode of expenditure was Rp 1.70 million, with a lower boundary of Rp 1.05 million and an upper boundary of only Rp 5.14 million.

Senior economist and former finance minister Bambang Brodjonegoro said the decline in the economic level of Indonesia’s middle class is not only due to the Covid-19 pandemic and widespread layoffs. It is also due to the daily habit of relying on packaged water, such as gallons.

“All this time, unconsciously, it has been eroding our income quite significantly with our style of relying entirely on gallon water, bottled water and all sorts of things,” Bambang said at the Indonesian Chamber of Commerce and Industry (Kadin) office.

The National Development Planning Minister/Head of Bappenas during President Joko Widodo’s administration stressed that the habit of consuming packaged water does not occur in all countries.

In developed countries, for example, middle-class citizens are accustomed to drinking water provided by the government in public places. With such mass drinking water facilities, people in developed countries do not need to spend money on drinks.

“The purchasing power of their middle class is safe because even for water they do not need to spend too much money,” he said.

Even so, Bambang said the drinking water factor is just one of many other factors causing many middle-class people to fall to a lower economic class. Bambang suspects the main factor behind the collapse of Indonesia’s middle class is the Covid-19 pandemic.

“The causes are varied. Because we see the data from 2019 to 2023. So the first cause is Covid,” he said.

During Covid-19, he said, many middle-class people lost their jobs. Meanwhile, others experienced business bankruptcy. “Don’t forget that Covid lasted 2 years and what happened at that time was that there were middle-class people who lost their jobs and middle-class people whose businesses stopped or went bankrupt,” he said.

Unfortunately, he said, after the pandemic subsided, the public was hit by other problems such as high interest rates. The rise in interest rates, he said, inevitably affected the economy.

“So I see it as a combination that started with Covid, then was extended by high interest rates, a weakening exchange rate, everything becoming expensive,” he said.

Not only high interest rates, Bambang said the middle class’s efforts to recover from Covid-19 were also hit by rising rice prices due to the El Niño effect. Although inflation is generally stable, Bambang said the rise in rice prices reduced the purchasing power of the middle class.

“That combination is what made part of the middle class fall into the aspiring middle class,” said Amalia.

Bambang also reminded that the phenomenon of online gambling greatly affects a person’s economic condition because of its highly addictive nature. According to him, this activity drains people’s pockets very quickly. “Because it is addictive, it very quickly depletes our income,” he concluded.