Retail sales and consumer confidence strengthened in October 2025 as households increased spending ahead of the Christmas and New Year holidays, signaling renewed optimism toward the economy. The improvement coincides with Bank Indonesia’s (BI) projection of steady growth next year, supported by resilient domestic demand and stable inflation expectations. 

According to preliminary BI data released on Tuesday, the Retail Sales Index (RSI) is expected to reach 219.7 in October, reflecting a 4.3% year-on-year (yoy) increase from 210.6 in October 2024. The growth was mainly driven by higher sales in food, beverages, and tobacco, cultural and recreational goods, and other household equipment. On a monthly basis, retail sales are projected to rise 0.6% month-to-month (mtm), in line with stronger consumer demand ahead of the Christmas season. 

In September 2025, the RSI recorded a 3.7% yoy gain, up from 3.5% the previous month, supported by stronger sales of spare parts and accessories, food, beverages, and tobacco, and recreational goods. However, retail activity contracted 2.4% mtm, largely due to a drop in the clothing subcategory. 

From the price perspective, inflationary pressures are projected to increase in December 2025 and March 2026, coinciding with the festive seasons of Christmas and Idul Fitri. BI’s General Price Expectation Index for the respective months rose to 157.2 and 172.5, up from 134.6 and 169.2 previously, reflecting higher demand during major holidays. 

The improving retail outlook was consistent with BI’s Consumer Survey for October 2025, which showed the Consumer Confidence Index (CCI) climbing to 121.2 from 115.0 in September, indicating stronger optimism among households. The Current Economic Condition Index increased to 109.1 from 102.7, while the Consumer Expectation Index reached 133.4, up from 127.2, supported by more positive views on income, job availability, and business prospects. 

In a parliamentary hearing on Wednesday, BI Governor Perry Warjiyo said the central bank expects Indonesia’s GDP growth to reach 5.33% in 2026, with the potential to rise to 5.4% if fiscal spending is accelerated. He projected annual headline inflation at 2.62% and the rupiah exchange rate averaging IDR 16,430 per USD next year. 

Warjiyo said BI’s 2026 growth outlook underpins its budget planning for the year and includes a credit growth target of 8% to 12%, compared with 8% to 11% in 2025. The central bank will continue to maintain monetary stability and monitor domestic consumption trends to sustain economic expansion.