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Consumer confidence index in Indonesia at highest level in 2 years

Publication Date : 08-08-2014


The Indonesian consumer confidence index jumped to a two-year high in July, with many upbeat about current and future economic conditions, a recent survey by Bank Indonesia (BI) has shown.

The consumer confidence index climbed 3.5 points to 119.8 last month from 116.3 in June, reflecting the stronger purchasing power of Indonesian consumers during Ramadhan and Idul Fitri as well as consumers’ confidence in the overall economy, BI stated in its monthly consumer survey released on Wednesday.

“Last month, my spending increased by 70 per cent compared to previous months,” said Richo Putra, a 26-year-old man who works as a civil servant in Jakarta.

Richo said that after receiving his Idul Fitri holiday bonus from work, he spent half of it on tickets to his hometown of Tuluangagung, East Java, new clothes in addition to other needs.

He said that his food spending also surged during Ramadhan.

“While I usually buy food at modest food stalls, I ate at restaurants several times during Ramadhan with my friends,” he said.

Richo might be the only young working citizen in the country confident about the country’s overall economy.

The BI survey, which polled 4,600 households in 18 big cities across the country, said that the consumer confidence index jumped in all cities, with those with monthly spending above 5 million rupiah (US$423) showing the highest increase in the consumer confidence index.

The survey has also shown that the country’s consumer expectation index — covering economic conditions over the next six months — jumped 4.3 points to 125.7 and the current economic condition index rose 2.4 points to 113.9.

The current economic condition was supported by the rise of its derivative indexes, including income index, the survey stated.

“Better consumer perception on income is mainly due to the Idul Fitri bonuses received by most workers in mid-July ahead of the Idul Fitri holiday,” BI stated in the survey.

The survey has also shown that consumers were upbeat that the country’s economic conditions in the next six months would be better-off on the back of massive infrastructure projects and a relatively modest inflation rate.

The consumers expected prices to decreased in the next three months, particularly for apparel and food products, the survey showed.

The expectation, however, contradicts a previous assumption by the Indonesian Food and Beverages Association (Gapmmi), which estimated food and beverage price hikes due to the recent subsidised fuel consumption restriction imposed by the Downstream
Oil and Gas Regulatory Agency (BPH Migas).

Gapmmi chairman Adhi S. Lukman said previously that the situation would also be worsened by a 10 per cent-value added tax (VAT) on raw materials, including agricultural products.

Based on the Supreme Court decision in February revising Government Regulation No. 31/2007 on strategic goods exempt from VAT, the government is expected to impose a 10 percent-VAT on raw materials, excluding several commodities, such as palm oil.


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