JAKARTA - Economic observer from Andalas University (Unand) Syafruddin Karimi assessed that deflation of 0.37 percent in May 2025 was not just a decrease in ordinary prices.
"This figure keeps an in-depth message about the weak demand from the public. Although annual inflation is still recorded at 1.6 percent and current year's inflation is at 1.19 percent, this data shows household consumption is not moving aggressively," he explained in his statement, Tuesday, June 3.
Syafruddin said that although prices decreased and supply remained stable, people were still reluctant to shop.
This shows that there is greater psychological pressure than the cheap price boost.
"The consumers are silent not because they don't need it, but because they are not sure. They doubt the stability of income, worry about losing their jobs, and feel they are not financially safe. Under these conditions, the decline in prices does not necessarily trigger consumption. Instead, deflation is a reflection of public distrust of the current economic condition," he said.
He conveyed that people's purchasing power is not only determined by the amount of income, but also by expectations of the future.
In addition, he added, if people feel that their income is stable or even increasing, they will be bolder for shopping and vice versa, if they feel the future is uncertain, they will choose to save their money.
"This is what makes deflation a signal that policymakers must carefully interpret," he stressed.
According to him, when consumption weakens, the production sector is also affected and producers will reduce output, delay employment, and withhold expansion.
"As a result, the economy is moving slower. This chain is interrelated: consumption triggers production, production creates income, income again encourages consumption. When one stops, the whole cycle weakens," he explained.
On the other hand, Syafruddin said that the government needs to accelerate the realization of state spending, especially those that have a direct impact on the community and social assistance programs, energy subsidies, and labor-intensive projects that must be carried out aggressively.
He said that every rupiah spent in the real sector will create demand, create jobs, and strengthen purchasing power, in this way, the government can break the stagnation chain triggered by deflation.
Syafruddin said that the most urgent thing right now is to rebuild public trust so that the government and the monetary authority need to convey clear and consistent policy directions.
"The public needs to be convinced that the state is present and responsive to the existing conditions. That trust will be the main fuel to restore consumption and investment," he said.
Deflation is not a sign of success in reducing prices, but an alarm about weakening economic activity.
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According to him, this is a message that the consumption machine is out of work and people choose to wait.
"In this condition, the silence of consumers is more noisy than the sound of inflation. The government and business actors must jointly answer this message with concrete and measurable actions," he said.
Syafruddin said the government must move spending, strengthen social safety nets, and rebuild public trust, if this message is ignored, we are at risk of entering a deeper stagnation phase.
"If this message is read carefully and responded quickly, then deflation can be a momentum to direct the economy to the path of recovery. It's time to act," he concluded.
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