Jakarta: Learn about the "Lipstick Effect," a key driver of Indonesia's economy today, which is occurring alongside stark economic inequality. While macroeconomic indicators suggest people are tightening their belts, consumer behavior in the entertainment and lifestyle sectors is completely contrary.
According to Thai News Agency, recent economic data and figures clearly indicate that the Indonesian economy has been affected by several crises, forcing Indonesians to tighten their belts and save money. These include the rupiah weakening to near-record lows against the US dollar, a sharp correction in the Jakarta stock market index, and a significant surge in the price of unsubsidized fuels like Pertamax. Furthermore, the Indonesian central bank has raised interest rates to support the currency.
But amidst these economic pressures, a paradoxical situation emerged: the 6.6 online shopping festival saw record-breaking sales, local lifestyle events like brightspotCITY 2026 experienced high per-person spending, and the "ticket war" for K-pop concerts saw hundreds of thousands of people queue online, causing expensive tickets worth millions of rupiah to sell out in minutes.
According to traditional economic theory, the "Lipstick Effect" states that during times of economic uncertainty, consumers tend to postpone large, expensive purchases like houses or cars-which seem unattainable due to high mortgage interest rates and inflation-and instead spend on "affordable luxuries," such as concert tickets costing over 3 million rupiah or premium local fashion brands. These purchases aim to provide short-term happiness, emotional support, and boost morale amidst stress and external problems. This explains why, even during economic downturns, large shopping malls, festivals, shopping events, and cafes in Jakarta remain crowded, reflecting Indonesian culture's emphasis on community and shared time.
Furthermore, younger consumers are willing to take on short-term financial burdens or use credit card installment plans to purchase concert tickets, viewing them as a reward for hard work rather than as unnecessary luxury. This has benefited a variety of product categories, not just concert tickets and festivals, including the beauty and cosmetics industry, which saw double-digit sales growth of 12-15%, contrasting with the overall retail sector's growth of less than 5%. Trendy cafes and food brands continue to have long queues, and popular cartoon characters like Labubu dolls and mystery boxes remain popular stress-relief destinations for Indonesian shoppers.
Meanwhile, the weakening rupiah has led some upper-middle class individuals to opt for less international travel and instead spend on domestic tourism and entertainment, particularly in Java and Bali.
While the "Lipstick Effect" effectively describes shifts in consumer psychology, local financial analysts further point out that economic pressures are severely uneven. Middle- to lower-income groups are facing real hardship, with many forced to dip into their savings just to cope with rising daily living costs. Conversely, the savings index for upper- to middle-income Indonesians is soaring. These individuals have disposable income and are largely unaffected by daily inflation, making them the primary purchasing power driving the country's premium concert and lifestyle markets.
Ultimately, sold-out concerts or soaring shopping sales don't necessarily mean the overall economy is strong. Instead, they reflect consumers re-prioritizing "in-the-moment happiness and experiences" while putting long-term financial plans requiring large sums of money on hold.