As inflation hits Indonesia, some businesses bite the bullet while others pass the buck

In Indonesia, businesses are grappling with rising inflation, leading to a divergence in how they handle increased costs. Pemuda Barbershop in Bogor exemplifies businesses choosing to absorb these expenses. Owner Supriyanto maintains a price of 5,000 rupiah (US$0.31) per haircut, a rate unchanged since 2008, stating, "I don't have the heart to raise my prices. Where else will these people go?" This approach provides a crucial buffer for the country's lower-income population, particularly the 23 million living below the poverty line, defined as earning less than 600,000 rupiah per month. These businesses act as a small but significant shield against a struggling economy. The economic pressures stem from a weakening rupiah, which escalates the cost of imported goods, and rising energy prices influenced by global conflicts. These factors ripple through the economy, affecting everything from transportation to food prices. However, not all businesses can afford to absorb the costs. Many food vendors interviewed by CNA have reluctantly increased their prices due to climbing ingredient and fuel expenses. Manufacturers are also feeling the squeeze from higher energy and raw material costs. This has contributed to the closure of dozens of factories and a wave of layoffs, with over 43,000 workers losing their jobs between January and June, a 34% increase compared to the same period last year. Experts point out that nearly 60% of Indonesian workers are in the informal sector, which is not monitored by the Ministry of Manpower, suggesting the true number of job losses is likely much higher.

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I don't have the heart to raise my prices. Where else will these people go?