Indonesia's Middle Class Spends Most on Energy, Study Finds

A recent study by the Institute for Economic and Social Research (LPEM) at the University of Indonesia reveals a significant trend: Indonesia's middle class bears the heaviest burden of energy expenditures. The findings, based on the 2025 National Socio-Economic Survey, indicate that this demographic allocates a substantial 8.86 percent of their total spending to energy. This places them in a precarious position, particularly vulnerable to fluctuations in energy prices and potential subsidy reforms. The report, authored by LPEM UI researchers Jahen F. Rezki and colleagues, highlights that aspiring middle-class individuals also face considerable energy costs, spending 8.18 percent of their budget on energy. This contrasts with the upper class (7.15 percent), vulnerable class (7.07 percent), and the poor (6.28 percent), who allocate smaller proportions. The implications are clear: rising energy prices could disproportionately affect the middle and aspiring middle classes, who often do not qualify for social assistance programs. While the lower energy spending among the poor might seem less concerning, it reflects a more limited consumption basket and a greater reliance on subsidized energy, leaving them with less room to adjust their budgets. This analysis is particularly pertinent given the current global energy market volatility, exacerbated by the conflict between Iran and the US-Israel, which has pushed crude oil prices above $100 per barrel, significantly exceeding Indonesia's 2026 budget assumption. The report underscores that even before full domestic fuel price adjustments, energy costs already consume a significant portion of household budgets in Indonesia, exceeding that of countries like Mexico and Japan. This situation demands careful consideration of how the burden of energy spending is distributed across different income groups.

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The middle class recorded the highest portion of energy expenditure at 8.86 percent of total expenditure.