JAKARTA (TheInsiderStories) - Bank Indonesia’s latest survey has shown slowdown growth in retail sales during the first quarter (Q1) of this year due to due to high inflation at the beginning of the year. The slowdown also indicates the slowdown of people’s purchasing power.
The retail sales growth which is reflected by Retail Sales Index in February 2017 grew by only 3.7 percent year on year (yoy) or lower than in January 2017, which grew by 6.3 percent yoy. While, inflation in the first three months of 2017 reached 1.19 percent year-to-date, and 3.61 percent yoy, led by electricity prices.
“In March 2017, retail sales growth also slowed down as it only grew by 2.6 percent yoy or lower than growth in February 2017,” Executive Director of Communication Department BI Tirta Segara said in press statement.
The slowdown of retail sales growth was found in the food and non-food group. In that period, retail sales of food group was expected to grow by 4.9 percent or lower than in the February which grew 5.1 percent. While, the sales growth of non-food commodity group was expected to decline by 0.7 percent or lower than in February 2017 by 1.8 percent.
Additionally, the survey also predicted that the pressure of rising prices at the level of retailers in the next three months are expected to increase. This can be seen from the General Price Expectation Index for the next three months, which picks up to 140.4 or higher than 134.1 in the previous month at 134.1. Even though, the pressure of rising prices in August 2017 is expected to slow down in the next 6 months to 131.3 or down from the previous month at 132.3.
The Institute for Global Competitiveness Skha Economist Eric Alexander Sugandi sees high inflationary pressures in the beginning of the year affects negatively to the people’s purchasing power. It was confirmed by the retail sales index for all categories of goods fell in the last three months.
Bank Rakyat Indonesia economist Akbar Suwardi said the slowdown of retail sales is quite alarming which was affecting the private consumption growth in Q1-2017. In the past few years, private consumption has become main engine of Indonesia’s GDP growth.
“The private consumption growth in the Q-I-2017 could be lower than the same period last year. The decline in retail sales growth index describes the decline of private consumption,” he said.
However, he is still optimistic over sales data which will push private consumption such as harvest season in March and April, improving of the vehicle sales and the increasing of the Jakarta Composite Index (JCI).
“If there is a decline of private consumption growth, maybe it might not be far from the same period of the last year,” he added. (RF)