Consumer Confidence Drops: BI Survey


JANUARY 06, 2015

Jakarta. A survey by Bank Indonesia showed that consumer confidence weakened slightly on concerns about possible price pressures in the future.

The central bank survey, which is based on sampling from 4,600 households in 18 major cities in Indonesia, showed the consumer confidence index falling slightly by 3.6 points to 116.5 in December. The result of the survey was published on Monday.

The index measures consumers' mood to purchase durable goods and their general view about the country's economy.

The survey has taken into account the more than 30 percent rise in the price of the subsidized fuel on Nov. 18, but did not factor in the Jan. 1 decline of the fuel price.

It shows consumers expect to see price pressures early this year, but from March, the price pressures were likely to come down.

"Although they are worried about [the impact of] further steps by the government to eliminate energy subsidies, respondents a re [generally] optimistic that over the next six months," President Joko Widodo's administration can improve logistics in the country, which ultimately will also help lower prices of goods sold.

In less than a month after Joko assumed office, he made a bold move by raising the fuel price, which aimed to shift spending from fuel subsidies to more productive spending like infrastructure and welfare.

But on Jan. 1, the government lowered the price of the widely used low-octane gasoline, Premium, by 10.6 percent to Rp 7,600 (60 cents) per liter, and applied a new fixed subsidy scheme that removes subsidies from the sale of Premium.

Bank Indonesia also released another survey on Tuesday, which shows that the annual retail sales grew at 14.1 percent in November compared with 17.6 percent in October.

The survey of 650 retailers in 10 major cities shows that retail sales on a yearly basis are expected to slow between December and February in line with softening demand and monsoon season weather disruptions, affecting the distribution of goods.

Additional reporting by Reuters