Coordinating Minister for the Economy Airlangga Hartarto says people's purchasing power has increased along with the growth of the manufacturing sector which remains positive ahead of Ramadan and Idul Fitri 2025, a condition reflecting the resilience of the national economy amidst various global challenges.

"The government continues to strive to maintain people's purchasing power and encourage strong domestic consumption through various strategic policies, such as accelerating the distribution of social assistance and providing Idul Fitri allowances (THR) for Civil Servant (ASN) and private workers," Airlangga said as quoted in a statement on Wednesday, March 5, 2025. 

Indonesia recorded deflation of 0.48 percent month to month (mtm) or 0.09 percent year on year (yoy) in February 2025, although core inflation still increased by 0.25 percent (mtm) or 2.48 percent (yoy). 

Volatile food components also experienced deflation of 0.93 percent (mtm) with several main commodities, such as broiler chicken, shallots, red chilies, cayenne pepper, tomatoes, and broiler chicken eggs experiencing price declines. 

Meanwhile, government-regulated prices fell by 2.65 percent (mtm) or 9.83 percent (yoy), especially due to a 50 percent electricity tariff discount for household customers with 450 VA to 2200 VA power during January and February 2025. 

To maintain purchasing power and support economic growth, the government has prepared various policies:

 - National Religious Holiday (HBKN) stimulus program,such as discounts on airline tickets and toll rates, Idul Fitri homecoming tourism programs, and shopping discount programs. 

 - Market operations by State Logistics Agency (Bulog)and food SOEs to ensure price stability and availability of basic necessities, such as cooking oil, consumer sugar, frozen buffalo meat, and rice at prices below the Highest Retail Price (HET). 

- Economic incentives, such as electricity tariff discounts, VAT borne by the government (DTP VAT)incentives for property and electric vehicles, and Indome tax borne by the fovernment (DTP PPh) incentives for labor-intensive sectors. 

- Disbursement of People's Business Credit (KUR) worth Rp55.4 trillion until the end of March 2025, with a focus on the agriculture, trade, and manufacturing sectors to strengthen MSMEs and support digital transformation. 

PMI touches highest level

Indonesia's manufacturing sector showed significant growth as seen from the Manufacturing Purchasing Managers' Index (PMI), which rose to 53.6 in February 2025 from 51.9 in January 2025. This is the highest level in the last 11 months. 

This increase was driven by a surge in domestic orders ahead of Ramadan and Idul Fitri, which contributed to increased production and additional workforce in the manufacturing sector.

"Industry players' confidence is also high, with the level of confidence in production growth reaching its highest level in the last three years," Airlangga cited. 

Regionally, the ASEAN Manufacturing PMI also increased from 50.4 to 51.5 in February 2025. 

Although Indonesia's manufacturing growth continues to increase, the government still anticipates a possible decline in manufacturing activity in the coming months, particularly due to various industrial issues that could affect market stability.