Indonesia’s Consumer Confidence for December 2025, released January 9, 2026, came in at 123.50, slightly below the market estimate of 125.00 and down from November’s 124.00 reading. This marks a 0.40% month-over-month decline but remains well above the 12-month average of 119.30, signaling sustained positive sentiment despite recent headwinds.

Drivers this month

• Moderation in consumer optimism on inflation concerns and rising borrowing costs.
• Stable employment prospects supporting household income expectations.
• Mixed signals from retail sales and durable goods orders.

Policy pulse

Bank Indonesia’s recent rate hikes to combat inflationary pressures have begun to temper consumer enthusiasm. The central bank’s benchmark rate now stands at 5.75%, up 50 basis points since September 2025, tightening financial conditions.

Market lens

Following the release, the IDRUSD currency pair saw a mild depreciation of 0.30%, reflecting cautious investor sentiment. Indonesian equities, represented by JCI, experienced a slight dip of 0.50%, while bond yields edged higher.

Consumer confidence is a leading indicator of household spending, which accounts for roughly 57% of Indonesia’s GDP. The December 2025 reading of 123.50 remains elevated compared to the 117.50 low in June 2025, reflecting a recovery from mid-year softness.

Core macroeconomic indicators

• GDP growth for Q4 2025 is estimated at 5.10% year-over-year, supported by domestic consumption and exports.
• Inflation accelerated to 4.80% in December, above Bank Indonesia’s 3.00%–4.00% target range.
• Unemployment rate held steady at 5.20%, near pre-pandemic levels.

Monetary policy & financial conditions

Bank Indonesia’s monetary tightening aims to anchor inflation expectations. The policy rate hike cycle since mid-2025 has increased borrowing costs, impacting consumer loans and mortgages. Credit growth slowed to 8.50% year-over-year in December from 9.30% in October.

Fiscal policy & government budget

The government maintained a fiscal deficit target of 2.50% of GDP for 2025, with increased spending on infrastructure and social programs. Tax revenues rose 6.20% year-over-year, aiding deficit control without dampening consumption.

Chart insight box

Market lens

Immediate reaction: The JCI index dipped 0.50% post-release, while the IDRUSD pair weakened 0.30%. Indonesian government bond yields rose 5 basis points, reflecting cautious sentiment amid monetary tightening.

Looking ahead, Indonesia’s consumer confidence trajectory will hinge on several factors. The central bank’s inflation fight may continue to restrain spending, while fiscal stimulus and improving labor markets could support sentiment.

Bullish scenario (30% probability)

• Inflation moderates below 4%, enabling rate cuts by mid-2026.
• Strong wage growth and employment gains boost household income.
• Consumer confidence rises above 130, fueling robust consumption-led growth.

Base scenario (50% probability)

• Inflation remains near 4.50%, with steady but cautious monetary policy.
• Consumer confidence stabilizes around 123–125.
• GDP growth holds near 5%, supported by balanced domestic and external demand.

Bearish scenario (20% probability)

• Inflation spikes above 5%, forcing aggressive rate hikes.
• Consumer confidence falls below 120, dampening spending.
• External shocks, such as geopolitical tensions or commodity price shocks, weigh on growth.

Indonesia’s December 2025 Consumer Confidence reading of 123.50 reflects a cautiously optimistic consumer base navigating a complex macroeconomic environment. While monetary tightening and inflation pose challenges, steady employment and fiscal support provide counterbalance. The coming months will test the resilience of household spending amid evolving global risks and domestic policy shifts.