Airlangga Says Entering Ramadan People's Purchasing Power Increases

Coordinating Minister for Economic Affairs (Menko) Airlangga Hartarto. (Photo: Doc. ANTARA)

Coordinating Minister for Economic Affairs Airlangga Hartarto said that entering the month of Ramadan and ahead of the Eid al-Fitr 2025 celebration, people's purchasing power experienced an increase which was followed by positive manufacturing growth.

Overall, Indonesia's inflation is controlled by core inflation (core) which has increased and on the other hand, the manufacturing sector also shows positive performance, reflecting national economic resilience.

As for February 2025, Indonesia experienced deflation of 0.48 percent (mtm) or 0.09 percent (yoy).

However, core inflation continued to show an increase, with a figure of 0.25 percent (mtm) or 2.48 percent (yoy) which was slightly higher than the previous month which was recorded at 2.38 percent (yoy).

Furthermore, the price component for volatile food (VF) was recorded to have deflation of 0.93 percent (mtm) or inflation of 0.56 percent (yoy).

Some of the commodities that contribute to the deflation include broiler meat, shallots, red chilies, cayenne pepper, tomatoes, and broiler eggs.

Meanwhile, the price regulated by the Government or administrative price (AP) experienced deflation of 2.65 percent (mtm) or 9.83 percent (yoy), most of which were caused by the policy of providing a 50 percent discount on electricity rates to household customers with a power of 450 VA to 2200 VA during January and February 2025.

The government continues to increase people's purchasing power and encourage domestic consumption to remain strong through various strategic policies, such as accelerating the distribution of social assistance and distribution of holiday allowances (THR) for ASN and private workers. The government has also launched various programs for the National Religious Holiday stimulus (HBKN) of Ramadan and Eid Al-Fitr 2025 including discounted flight ticket prices, toll tariff discounts, Eid homecoming tourism programs, and shopping discount programs," he said in his statement, quoted Wednesday, March 5.

Airlangga said that this step was also strengthened by market operations by Perum Bulog and BUMN food to ensure price stability and the availability of basic commodities such as cooking oil, consumption sugar, frozen buffalo meat and rice at a more affordable price than the Highest Retail Price (HET).

In addition, Airlangga said that the Government continues to introduce various economic incentives to encourage growth, such as discounted electricity rates, DTP VAT incentives for the property and electric vehicle sectors, as well as DTP PPh incentives for labor-intensive sectors.

"The government is also targeting the distribution of People's Business Credit (KUR) of IDR 55.4 trillion by the end of March 2025, with a focus on the agricultural, trade and manufacturing sectors to strengthen MSMEs and digital transformation," he explained.

As for the manufacturing sector, Indonesia also recorded a positive achievement with the Manufacturing Purchasing Managers' Index (PMI) in February 2025 which was recorded at the level of 53.6, this figure shows an expansion of the manufacturing sector, higher than the previous month's expansion figure which was recorded at 51.9 and became the highest in 11 months.

Airlangga said this increase was driven by a surge in domestic orders ahead of the HBKN of Ramadan and Eid al-Fitr, which triggered an increase in production and additional labor in the manufacturing sector.

In addition, Airlangga expressed optimism that industry players were also high, with the level of confidence in production growth reaching its highest level in the last three years.

This achievement is in line with the condition of ASEAN Manufacturing PMI which experienced an increase in expansion level to 51.5 in February 2025, from 50.4 in January 2025.

In detail, a number of countries in ASEAN have also experienced improvements in the manufacturing sector such as Myanmar (48.5 out of 47.4), Thailand (49.6 out of 50.6), Malaysia (49.7 out of 48.7), and Vietnam (49.2 out of 48.9).

Meanwhile, the country that experienced a decline was the Philippines, which fell from 52.3 to 51.0, but remained in the expansion zone.

However, Airlangga expressed his anticipation of a decrease in manufacturing activity in the following month remains a concern amid various important issues in several manufacturing sector companies.

"Although there are several challenges in inflation in certain commodities, the national economy still shows strong resilience," he said.

Airlangga said the Government continues to strive to maintain price stability and ensure the availability of basic goods ahead of Ramadan and Eid al-Fitr, as well as encourage the manufacturing sector to continue to grow with various policies implemented, it is hoped that people's purchasing power will continue to increase and the national economy can continue to grow sustainably.