Lifestyle Drives Household Consumption Expenditure Growth

Rapid advancements in technology and information have transformed consumer spending habits. Previously, household consumption was primarily focused on fulfilling basic needs; now, it has shifted to include secondary and tertiary needs. This is reflected in spending on lifestyle choices, which has grown faster than spending on food and beverages. Hanging out in cafes and traveling have become lifestyle choices for many, especially millennials, fueled by the proliferation of information on social media.

Based on data from the Central Bureau of Statistics (BPS), Indonesia's Gross Domestic Product (GDP) shows that household consumption expenditure on restaurants and hotels in the third quarter of 2018, at constant prices, grew by 5.69% compared to the third quarter of the previous year. This was followed by consumption expenditure on transportation and communication, which grew by 5.68%. Both sectors grew faster than total household consumption (5.01%) and consumption of food and beverages (5.21%). Nevertheless, food and beverage consumption still dominates, accounting for approximately 39% of household expenditure.

Household consumption expenditure in the third quarter of 2018, at current prices, reached Rp 2,119.47 trillion, representing 55.26% of the total GDP of Rp 3,835.6 trillion. At constant prices, the GDP was Rp 1,440.84 trillion, or approximately 53.68% of the total Rp 2,684.19 trillion.

(Read Databoks: Why is Household Consumption Important for the Economy?)