The indication of decrease in purchasing power among the middle and lower class becomes more apparent from various phenomena happening recently. An observer and lecturer in the Economics and Business Faculty at Universitas Dian Nuswantoro (Udinus), Nanda Adhi Purusa, S.E., M.E., spotlighted this decrease of purchasing power and reminded the government to make concrete decisions.

The first phenomenon that became a center of attention was a phenomenon called savings consumption, which showed a major decrease in people’s savings. As we can see, people have been reserving their savings to fulfill their basic needs.

“This shows that there is a major pressure on household consumption,” Nanda uttered.

Furthermore, he revealed that the decrease in middle-class proportion was also significant. According to the data, the middle-class proportion in 2019 reached 21.45%. However, in 2024, the percentage began to saw a decline to 17.13%. On the other hand, the percentage of people vulnerable to poverty began to increase from 20.56% in 2019 to 24.23% this year.

“This condition must be anticipated hastily, as it would worsen the economy as a whole,” he emphasized.

In addition, the development of the consumers’ price index indicates that there have been monthly deflations for the past six months. According to Nanda, this price deflation could indicate that the purchasing power among the people began to see a downfall. However, it is also necessary to conduct a further study if this deflation was caused by the lack of demand or other factors.

Meanwhile in the employment department, Nanda mentioned that according to the data provided by the Ministry of Employment, even more workers were laid off in 2024 compared to that of previous years. This data reflects that the condition of the real sector has not gotten better, resulting in many workers being laid off by their companies.

In terms of the monetary policies, a downgrade in the benchmarked interest rate of BI-Rate, which was accumulated 25 base point, reached 6% last September, inflicting changes in a more positive light. However, Nanda further prompted that this step must be supported with also positive and proactive fiscal policies.

“I would say that the government needs to reinforce the purchasing power of its people by enacting policies in favor of both the industrial sector and government spending. For instance, the government can increase their spending on aspects that may inflict multiplier effects on its people’s consumption,” he explained.

In addition, the socio-economic stability also serves as a crucial factor amidst the transition to the regional election, which will be held. With these strategic steps, the people’s purchasing power is expected to go to its normal state, allowing national economy to grow.

“Political certainty will deeply influence the investment climate and industrial performance, particularly the creative industry,” he concluded.