Sri Mulyani: Public Purchasing Power Remains Stable Despite Five Consecutive Months Of Deflation

Wednesday, 23 Oct 2024

Finance Minister Sri Mulyani Indrawati has refuted allegations that public purchasing power has declined, particularly in light of Indonesia's recent experience of deflation over five consecutive months.

Sri Mulyani explained that numerous studies indicate that commonly observed indicators, such as the consumer confidence index, may primarily reflect urban conditions.

"Whether we consider the consumer confidence index, retail index, or purchasing indices, we observe that these remain at stable and high levels. This suggests that there has not been a sudden and sharp decline," stated Sri Mulyani during her remarks at the Ministry of Finance on Friday, October 4, 2024.

She noted that this indicates that the segments of society measured by the consumer confidence index, including retail perspectives, continue to exhibit relatively consistent or stable activity.

Furthermore, when assessing the purchasing power perception among the middle class, she acknowledged the need for data collection in this demographic. Currently, she recognizes that some individuals in the middle class have fallen into vulnerable categories. Conversely, there are those in poverty who have ascended to the aspiring middle class.

"Thus, we observe two trends: the impoverished are moving up, while the middle class is experiencing a decline," remarked Sri Mulyani.

She attributed the decrease in the middle class primarily to inflation. With rising inflation, the poverty line increases, which can lead to a sudden drop for this group. Regarding layoffs, she assured that the government is attentive to these circumstances.

"For instance, while layoffs may occur in one area, there is also job creation happening elsewhere. According to statistics, over 11 million new jobs have been created in the last three years," she concluded.

Consequently, she believes that all aspects must be considered in their entirety. For instance, if there is currently a significant amount of foreign investment in the downstream sector, it is likely that job opportunities will arise in this area. A different situation exists in labor-intensive industries such as footwear, textiles, and garments, which previously served as key areas for job creation.

Additionally, the emergence of new job opportunities in the digital sector, exemplified by companies like Gojek and others, has become a remarkable phenomenon. Therefore, it is essential to recognize that the Indonesian economy is undergoing transformation due to various factors, she emphasized.

Regardless of these developments, whether due to technology or structural economic changes, the most vulnerable groups must continue to receive attention.

"We will persist in ensuring that the most vulnerable members of society receive support, whether in the form of social assistance or training, while simultaneously improving the investment climate to foster the creation of new job opportunities," she stated.

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