Living in Indonesia Is More Expensive Than You Were Told
Expats in places like Indonesia often face higher costs than CPI data suggests. Here’s what really drives expat expenses in frontier markets.
If you’ve ever told someone you’re moving to Jakarta (or Lagos… or Nairobi), you’ve probably heard the same well-meaning but misplaced response:
“Oh wow, it must be so cheap to live there!”
They’ll quote blog posts or cost-of-living websites with the confidence of someone who’s never spent $40 on imported cheese. Meals for $2! Rent that wouldn’t get you a broom closet in London! Domestic help that costs less than your gym membership! It all sounds wonderfully affordable… until you actually live there.
While those numbers do exist, they don’t describe your reality. They’re based on the lives of people who grew up in that economy, speak the language fluently, and aren’t trying to replicate a Western lifestyle inside a structurally different environment. The CPI measures the spending of locals, in local systems, consuming local goods.
But expats don’t fully participate in that economy. You operate on the margins of it. Sometimes you dip your toes in but your life is built on different expectations, different consumption habits, and a different infrastructure.
It’s not that the data is wrong. It’s just describing someone else’s life.
The CPI Illusion: Great for Locals, Not for You
The Consumer Price Index (CPI) is a perfectly reasonable metric, if your goal is to understand how the average local family is managing the cost of rice, public transport, or rent in a low-rise, fan-cooled apartment outside the city center. It’s a tool for policymakers, not for HR teams trying to estimate your monthly grocery budget.
CPI reflects the informal economy: the markets, the stalls, the warungs. It’s about the kind of consumption that happens in cash, in the local language, and within networks of family, and neighbors. Expats operate mostly outside that ecosystem.
Even a modest, well-intentioned expat lives in a different structure. You rent in areas with security. You shop where the food is labeled, the meat is refrigerated, and the floors are mopped regularly. You drink wine on weekends. Your kids need an education that transfers when you relocate again. You use products and services that rely on global supply chains, not local ones.
That consumption model exists in a different price universe. Prices are set less by local wages and more by what the top 5 percent (and their imported lifestyles) can tolerate.
So yes, CPI says Jakarta is cheap. But your groceries, your rent, your social life, and your basic comforts do not live in the same dataset. The CPI doesn't lie, it just doesn’t describe you.
The Big Ticket Items: Where Costs Actually Land
Let’s set aside the budget spreadsheets and go straight to what actually dents an expat’s wallet. Because while everyone loves to quote the price of a $1.50 nasi goreng, that’s not where the real money goes. Expat life is shaped by a handful of big, fixed, and hard to avoid key costs.
🏠 Housing
Unless you’re fully assimilating into the student backpacker lifestyle, you're not renting a kos-kosan with a shared toilet. You want clean running water, stable electricity, working internet, and a reliable lock on the door. That lands you in a gated community or serviced apartment, priced in U.S. dollars and targeted at a very specific demographic: people like you, who need urban functionality baked in.
These homes aren’t overpriced for no reason. They're expensive because they fill gaps in public infrastructure. You’re paying for water pressure, generators, internet that works during Zoom calls, and maybe even a guard who’s awake.
🧀 Groceries & Food
Local markets offer delicious food at astonishing prices. But no matter how well-meaning your intentions, most expats drift toward a blend of local meals and global comfort. And global comfort doesn’t come cheap. A bottle of wine might cost you three times what it would in Europe. Cheese is a luxury import. Western baby formula, peanut butter, decent olive oil; none of these are produced locally in volume. And when they are imported, they’re taxed, stored poorly, and sold at margins only the desperate can justify.
🎓 Education
If you have children, international schooling isn’t optional. Local systems often don't align with your expectations, and continuity matters. Fees start at painful and scale up to absurd. Capital levies, security deposits, and annual increases are all normal. It’s school plus bureaucracy.
🚗 Transport
Yes, drivers are affordable. But the cost of getting around isn’t just about salary. It’s about the time you lose in traffic, the maintenance on your vehicle, and the fact that public transport isn’t a viable fallback. Mobility is part of your survival strategy.
🧘 Leisure & Sanity
This category never gets mentioned in relocation briefings, but it matters. You’ll need breaks: from the noise, the logistics, the small daily frictions. Spa visits, short getaways, meals in settings where you don’t have to calculate hygiene risks. It all adds up. Not because you’re living large, but because life in a frontier city often demands recovery time.
The real costs aren’t glamorous. They’re practical.
The Two Economies: Why You Can't Just "Live Like a Local"
The idea of “living like a local” is romantic. Shop at the pasar, haggle for mangoes, eat street-side with your hands, learn a few Bahasa phrases, ride the ojek. It’s appealing in theory and, for a time, often enjoyable. Many expats come in with genuine enthusiasm for full immersion. Some even manage it.
But over time, most begin to drift back into the safety of the expat layer. Not because they want to, but because full integration isn't always sustainable.
Language is a real barrier. Not in terms of pleasantries or greetings, but in managing nuance: contracts, healthcare, maintenance, education. It slows everything down and raises the cost of getting anything done efficiently. Then there’s the reliability gap. Informal markets can offer great value, but they can also be hit-or-miss. You might find high-quality produce, or you might find last week’s leftovers. There’s no refund counter.
And once you factor in family, health, and professional stability, things change. You need systems that are consistent, even if they’re more expensive. That means private clinics, international schools, formal housing, clean food sources. That means exiting the informal economy by necessity.
You don’t live like a local not because you're unwilling, but because your life isn’t structured for it. The economy you're in runs parallel to the local one, intersecting at times, but mostly orbiting it.
It’s a strange equation. Domestic labor is accessible and inexpensive, subsidizing parts of your life. But the moment you reach for anything global the price flips. You save in some places and hemorrhage in others. That’s the reality of living between two economies, neither of which you fully belong to.
Arbitrage Isn’t What It Used to Be
One of the most enduring myths in the expat playbook is the classic: “Earn in dollars, spend in rupiah.” It’s repeated like a life hack, as if moving to Jakarta automatically turns your paycheck into a limitless resource.
But that idea no longer holds up the way it used to.
Here’s why.
The major costs that shape your financial life are rarely pegged to the local economy. They are priced in U.S. dollars, or in currencies that closely follow global trends. If the rupiah takes a hit, your landlord doesn’t renegotiate. Your school fees don’t drop. The wine at Kem Chicks doesn’t become suddenly affordable.
Meanwhile, the things that are priced in rupiah make up a shrinking percentage of your actual spending. These are small wins. Yes, your driver is affordable. Yes, your cleaner is underpriced compared to global standards. But those savings barely touch the cost structure that defines your month.
On top of this, inflation and currency volatility in frontier markets can easily outpace any advantage you thought you had. A weak local currency can quickly become your problem when it affects fuel costs, import taxes, and the general price of anything with a foreign origin.
Unless you’ve committed fully to living locally, with the skills and resilience to match, the arbitrage game just doesn’t pay off like it once did. You’re not exploiting an economic loophole. You’re simply spending differently, in a different context, with a few modest wins and a lot of hidden costs.
The savings, if they come at all, are smaller than advertised.
The next time someone throws Jakarta’s cost of living index at you as proof that you’re living the dream on a discount, feel free to hand them your latest wine receipt or your international school invoice and let the silence do the talking.
While the Consumer Price Index and similar cost-of-living metrics aren’t inaccurate, they’re not written for you. They measure what it costs to be a local in a local economy, not what it takes to be a foreigner living with basic continuity and comfort.
Even a modest expat life requires participation in systems priced outside the CPI. These are systems built around scarcity, import dependency, and the absence of reliable public infrastructure. You’re not paying more to live luxuriously. You’re paying more to live functionally.
The indexes can’t capture that. They don’t account for the premiums you pay for safety, for access, for products that meet your needs. They reflect one economy, and you’re operating in another.
So don’t let the spreadsheets fool you. The numbers might say “cheap,” but the reality, as anyone actually living it knows, is far more complicated.
At StratEx - Indonesia Business Advisory we help companies and candidates better understand Indonesia (and other Southeast Asia frontier markets). If you're moving to Indonesia and interested in high fidelity cultural insight, contact us for more info.