Jakarta. A surprise interest-rate hike by Bank Indonesia and a sharp increase in fuel prices within the same week are raising concerns about mounting pressure on Indonesia’s middle class, with economists warning that some households could slip into more vulnerable economic categories.

Earlier this week, Bank Indonesia unexpectedly raised its benchmark interest rate by 25 basis points to 5.50% in an effort to support the rupiah, which recently weakened beyond Rp 18,000 per US dollar. A day later, state-owned energy company Pertamina increased the price of Pertamax gasoline by 32%, from Rp 12,300 to Rp 16,250 per liter.

The policy moves come at a time when Indonesia’s middle class has already been shrinking. According to the National Socioeconomic Survey conducted by the Central Statistics Agency (BPS), the country’s middle-class population fell from 52.3 million people in 2016 to 46.7 million in 2025.

At the same time, the aspiring middle class -- households just below middle-class status -- reached 142 million people, accounting for more than half of the country’s population.

Key Economic Driver
Together, the two groups are the backbone of Indonesia’s economy. In 2025, the middle class contributed 36.88% of household consumption, while the aspiring middle class accounted for 44.34%. Combined, they generated more than 81% of total household spending.

Household consumption itself contributed 53.88%of Indonesia’s gross domestic product last year, making purchasing power among these groups a critical driver of economic growth.

Economists warn that policies that increase household expenses could weaken consumer spending and push millions of aspiring middle-class Indonesians into lower-income categories.

At the same time, many government support programs are targeted primarily at lower-income households, including social assistance, the free nutritious meals program, tuition-free boarding schools, and subsidized health insurance.

“The middle-class group does not receive the same level of protection as lower-income groups, but they also don’t have the financial buffers available to higher-income households,” said Yusuf Manilet of the Center of Reform on Economics.

He noted that many middle-income households rely heavily on bank financing to purchase homes, vehicles, and other assets, making them particularly sensitive to rising borrowing costs.

Yusuf added that the weakening rupiah increases the risk of imported inflation as higher import costs gradually feed into consumer prices. Combined with rising fuel prices, this could further erode household purchasing power.

“If inflationary pressures stemming from rupiah depreciation and higher energy costs are not contained, purchasing power will continue to weaken and the risk of households moving down the socioeconomic ladder will increase,” he said.

Higher Costs, Same Income
A similar concern was raised by Gadjah Mada University economist Wisnu Setiadi Nugroho, who argued that Indonesia’s middle class remains relatively thin and concentrated in lower-middle-income segments, making it especially vulnerable to economic shocks.

According to Wisnu, the large size of the aspiring middle class reflects the growing prevalence of jobs that offer limited long-term economic mobility.

“People work hard, but the social ladder is no longer getting taller,” he wrote in an article published by the university.

Wisnu described the middle class as more than a statistical category, calling it a pillar of economic stability, consumption, and tax revenue.

“Real wages for the lower middle class have remained relatively stagnant, while housing, education, and transportation costs continue to rise. This is not a dramatic collapse but rather an income squeeze that gradually erodes households’ ability to save and plan for the future. Many families still appear to be doing fine, but their fiscal and financial breathing room is becoming increasingly narrow,” Wisnu wrote.

“This is not a dramatic collapse but rather an income squeeze that gradually erodes households’ ability to save and plan for the future,” he added.

Teuku Riefky, an economist at the University of Indonesia’s Institute for Economic and Social Research, said middle-income households have effectively become a shock absorber for recent economic adjustments.

“Yes, the pressure on the middle class is significant. Additional fiscal measures are needed in the form of expanded social safety nets,” Riefky said.

He called for temporary assistance targeting middle-income households, warning that without stronger support, consumption could weaken and more families could fall into the vulnerable category.

Add as a preferred source on Google +