Addin Anugrah Siwi, Jakarta – Indonesia's business chamber Kadin warns that the rupiah's continued slide against the US dollar is squeezing consumers and businesses alike, raising concerns over household spending in Southeast Asia's largest economy.
The rupiah weakened to Rp 17,716.5 per US dollar at Friday's close, according to Bloomberg data, extending pressure on import-dependent industries and retailers.
Kadin said the weakening currency could drive up prices of imported consumer goods and everyday products that still rely heavily on imported raw materials, packaging, or distribution components.
"If the rupiah continues to weaken, the risk of rising prices for imported consumer goods will increasingly be felt directly by the public," Kadin deputy chairman for industry affairs Saleh Husin said in a statement on Friday.
Saleh said the pressure would be felt most acutely by Indonesia's middle class, which may have to allocate a larger share of household spending toward basic consumption as prices rise.
Although the middle class now accounts for only about 11-17% of the population, its economic contribution remains dominant. The pressure on the middle class is also evident in official data. Figures from the Central Statistics Agency show that Indonesia's middle class has been shrinking steadily in recent years.
In 2019, Indonesia's middle class still numbered 57.33 million people, accounting for 21.45% of the population. By 2024, the figure had fallen to 47.85 million, or 17.13%. In 2025, the middle-class population declined further to 46.7 million people, equivalent to 16.6% of the total population, underscoring concerns that a growing share of Indonesians are slipping out of the income bracket that has traditionally driven consumption and economic resilience.
Indonesia's household consumption accounts for more than half of gross domestic product and has long served as the country's main growth engine. Economists have increasingly warned that weakening purchasing power among middle-income consumers could weigh on broader economic activity.
Kadin said sectors most vulnerable to the rupiah's depreciation include electronics, gadgets, cosmetics, imported footwear, premium fashion products, and certain imported food and beverage items.
"Electronics and gadgets are usually among the first to feel the impact because transactions are conducted directly in US dollars and the sector remains highly dependent on imported components," Saleh said.
Imported food and beverages are also exposed not only to exchange-rate pressure but also to rising global logistics and distribution costs, he added.
The business chamber said retailers now face a difficult choice between raising prices to protect margins or keeping prices stable to avoid hurting already fragile consumer demand.
"The weakening exchange rate increases procurement costs, international logistics expenses, and foreign currency payment obligations, putting pressure on business cash flow and profitability," Saleh said.
The group added that prolonged currency volatility could make companies more cautious about expansion plans, inventory management, and new import orders.
Kadin urged the government to maintain exchange-rate stability and strengthen market confidence through closer coordination between fiscal, monetary, and real-sector policies.
"Businesses need exchange-rate stability to maintain certainty in import planning and business continuity," Saleh said.
Source: https://jakartaglobe.id/business/kadin-warns-weak-rupiah-is-squeezing-middleclass-consumer