Three Components of Household Consumption Remained Weak in Q1 2021

The Central Statistics Agency (BPS) recorded that household consumption in the food and beverage component (excluding restaurants) still contracted by 2.31% year-on-year (yoy) in Q1 2021. This contraction was even lower compared to the previous quarter, which weakened by 1.39%.

A similar trend occurred in household consumption in the health and education components. Although it grew by 0.31% in Q1 2021, this figure was lower than in Q4 2020, which reached 0.64%.

Household consumption in other components also weakened in Q1 2021. During the first three months of the year, household consumption in these components contracted by 1.33%, lower than the -0.88% in Q4 2020.

Both household consumption components fall under goods and services that will be subject to value-added tax (VAT) in the future through the revision of the General Tax Provisions Law (KUP). This is feared to cause price increases that will be borne by consumers in both components.

Public transportation is also one of the service sectors that will be removed from the non-taxable object list. In Q1 2021, growth in household consumption in the transportation and communication component still contracted by 4.24%. However, this figure improved compared to Q4 2020, which was -9.45%.