CORE: Household Consumption In The Third Quarter Of 2023 Grows Slower

Illustration. (Photo: Doc. Antara)

JAKARTA - Executive Director of the Indonesian Center of Reform on Economics (CORE), Mohammad Faisal, said household consumption grew slower in the first quarter of 2023.

"We see that in the first quarter of this year, it is quite clear that there is an indication of a slowdown in household consumption, which means it is an indication of weakening in terms of purchasing power," said Faisal in a Quarterly Review CORE Indonesia discussion, quoted from Antara, Thursday, April 13.

Faisal said one indicator that reflects this condition is the Real Sales Index (IPR), which shows sales in the retail sector experienced a very significant slowdown, which only grew 1.6 percent in the first quarter of 2023.

According to him, this growth is much lower than the first quarter of 2022 which grew to 12.5 percent.

The decrease in the IPR occurred in almost all components of goods except for food and beverages. However, the increase in food and beverage components also slowed down compared to last year, which only grew four percent at this time when compared to 20 percent in the first quarter of 2022.

"Other (components) all contractions from motorized vehicle fuel to clothes, information and communication items as well," he said.

In addition, after the abolition of the Implementation of Restrictions on Community Activities (PPKM), long-distance mobility has not yet fully recovered or has not reached pre-pandemic conditions.

Faisal said that the weakening of household consumption was also contributed by the normalization of fiscal and monetary policies.

While the National Economic Recovery Program (PEN) is still running, there are many incentives given to a number of sectors including in motorized vehicles with relief from Sales Tax on Luxury Goods, and in buying houses. This helps increase domestic consumption.

"This has stopped in 2023, how will it affect? We can see here that home sales for small, medium and large types have all contracted in the fourth quarter of 2022," he said.