The Middle Class Under Pressure: Its Impact on Household Consumption and the Indonesian Economy

Abstract

This study analyzes the relationship between Gross Domestic Product (GDP), household consumption, and the middle class in Indonesia using five-year time series data and Pearson correlation analysis. The results indicate a strong negative correlation between household consumption and the middle class, as well as between GDP and the middle class. This implies that rising GDP and consumption are not accompanied by middle-class expansion. Increased consumption is mainly driven by inflation and higher living costs rather than real income growth. Indonesia’s economic growth remains non-inclusive, with benefits concentrated among higher-income groups. Therefore, policies focusing on equitable income distribution, stronger purchasing power, and productivity improvements are essential to reinforce the resilience of the middle class.